Development of Credit Facilities in Sierra Leone

Development of Credit Facilities in Sierra Leone Chapter 1 This study is on the creation of credit facilities to Small and Medium Size Enterprises in Sierra Leone with special focus on the construction industries. 1.1 Background to the Economy of Sierra Leone Sierra Leone is a relatively small country, on the West Coast of Africa with an area of approximately 28,000square miles. The estimated population is 5.5 million inhabitants, 30% of whom resides in the western area of the country according to recent census in 2006. The state of the country’s economy, immediately after independence from the British Colony in 1961 up to the 1970’s, was quite satisfactory in terms of performance. The exchange rate between the Leone and other foreign currencies was relatively good. More so, the British Pound Sterling was exchanged at One pound ( £1) to One Leone (Le1). The inflation rate was extremely low. The country’s earnings from exports were very much attractive, with Diamond export accounting for well over 50% of the country’s foreign exchange earnings. This was closely followed by cash crop exports such as Cocoa, coffee, oil palm, piassava and chillies. The country’s external debt position at this time was not high, Between 1972 to 1975, the economy started experiencing down turn that was mainly due to external factors, such as the famous oil price shock in 1973. Naturally, the 1980 Organisation of Africa Unity (OAU) summit that was hosted by the government of Sierra Leone fuelled the debt crisis in Sierra Leone. Because of the foreign exchange scarcity in the country, the credit agreement between domestic importers and their business partners aboard collapsed. In 1988, the country was forced to devalue her currency. Between 1992 and 1994, Sierra Leone successfully implemented an adjustment program supported by the International Monetary Fund (IMF) under the Right Accumulation Program (RAP). The World Bank also supported the program through the Reconstruction of Import Credit (RIC) in 1992 and the Structural Adjustment Credit (SAC) in 1993. Following the successful implementation of the RAP, the IMF approved a three year arrangement support under Enhanced Structural Adjustment Facility (ESAF). The implementation of the first annual program was disrupted by the escalation of the rebel activities in 1995. With the return of democracy in 1996, the IMF supported the economic recovery program adopted by the new Government with a second annual program under the ESAF. Poverty intensified with real per capita declining to US$142 in 2000. Since then Sierra Leone has been classified as the poorest country in the world and ranks at the bottom of the United Nations Development Programme (UNDP) Human Development Index. The growth in the economy has been underpinned by broad recovery in Agriculture, mining, manufacturing, construction and the service sector. The economy of the Country continues to worsen in early 1992 when the civil unrest started which causes untold sufferings on humans and the entire country. Many people were forced out of their houses and eventually became displaced persons and refugees in their own country and neighbouring country like Guinea, The Gambia and Ghana. Almost all segments of the business economy collapsed including banking and lending institutions. It was then the problems of growth in economy worsen and every thing completely deteriorated and collapsed. The almost 11 years of civil unrest ended in March 2002. The end of the war actually opens the door for a new beginning, for new economic growth and prosperity in the face of peace and unity. The situation has recently worsened because of the credit crunch faced by many of the world famous banking institutions and Sierra Leone has not been any exceptions. The effect coupled with other factors has created more gaps for banking institutions to provide loans to small and medium enterprises. In a press release from Prlog Dec. 15, 2008 by Robin Trehan as quoted â€Å"SMEs represent over ninety-nine percent of the country’s employers. While it is essential that these businesses obtain the necessary funding to remain active, they are often the first to suffer when financial crisis hits. Banks already facing financial hardship often deem SMEs as too risky to finance. Credit terms are becoming increasingly harder and qualifying for financing is subject to much stricter guidelines. The re are things that SMEs can do, however, to increase their chances of finding financing†. 1.2 Statement of the Problem The term credit in this thesis refers to an amount or sum placed at a person’s disposal by a bank and usually to be repaid with interest within a given period of time. Small and Medium Size Enterprises (SME) is very important in terms of the dynamic role in the development of the private sector in Sierra Leone. The SME’s are regarded as an engine for any economic growth and development in any country. They provide opportunities for job creation and expansion in the physical reconstruction of the economy especially for a post war development country like Sierra Leone. Majority of the physical infrastructures ranging from housing, office buildings and business structures were all destroyed during the civil unrest. These structures need to be reconstructed for the economy to grow and become prosper. Today many construction companies or firms have emerged to assist in the rehabilitation and reconstruction. While there may be some of the construction companies who have existed of years, it is also true that majority of these construction companies are new ones who are just coming up to help and provide their expertise in the development of Sierra Leone. But yet still, it is a challenge for many of these companies to adequately involve in the process of rehabilitation and reconstruction simply because they cannot get the required finance in the form of overdraft or loans, or provide the necessary collateral for the banks as required, making them less competitive. In Sierra Leone the performance of SME’s over the years has been very poor which is due to the fact that the creation of credit from the banks which is an essential stimulant for private investment in the construction industries has been grossly under performing. This is one of the reasons for poor performance of the economy in terms of growth in most developing countries including Sierra Leone. Construction companies have not been able to access huge funds by way of loan over the years from the banking and other financial institutions, mainly due to lack of confidence in the private sector as a result of problems like moral hazards and the absence of collateral security and the lack of experience in construction engineering. 1.3 Justification of the Study The importance of the construction industries in the process of rehabilitation and reconstruction of the war towns in Sierra Leone cannot be over-emphasized. During the war there was so much destruction of infrastructures in the country, now that there is peace there is high need for reconstructions and the development of new roads and structures to aid national growth. International organisations like the International Monetary Fund (IMF), World Bank, African Development Bank (ADB) main focus is to assist Small Medium Size Enterprises (SME) in developing countries gain strong financial base. It had been felt that SMEs employ majority of the work force in the developing countries, therefore, they have realised that when SME become financially stable the economy of the nation will be better and that the citizens will be able to live a comfortable life. The role of commercial banks and other financial institutions in private sector development and the assessment of their overall performance in terms of economic growth and development has not received much of the attention by researchers. The central bank maintaining interest rate at high level has greatly contributed to discourage SMEs from borrowing from retail banks and other financial institution for investment purposes. This is one of the reasons why most SMEs are under developed. Besides commercial banks are requesting for very stiff conditions to access loan by the private sector. A study on the provision of credit to construction companies for investment towards economic growth has not been studied in greater detail by previous researchers. This among others, gave me the urge to probe into the activities of the commercial banks and other financial institutions in the creation of credit to construction companies in Sierra Leone, This study is to help government and other professionals as well as other stakeholders, to grasp fully the implications of credit refusal to small and medium size enterprises and how it will affect the development of the nation. The result of this study is hope to enable banking and other financial institutions, local and national government and other stakeholders to device concrete ways by which small and medium size enterprises can easily get access to credit to undertake construction programmes. 1.4 Objectives of the study The main aim of the study is to assess the implications of credit creations by the banks and other financial institutions to Small and Medium Size Enterprises with special focus on the Construction Industries for economic growth and development in Sierra Leone. The specific objectives are: To determine the extent to which banks have been contributing to the development of the construction industries in Sierra Leone. To examine some of the reasons responsible for the inability of the construction industries to solicit loans from the banks and other financial institutions for the purpose of investment. To establish reasons for the reluctance of the banking and other financial institutions to provide the much needed funds for private sector development. To examine the reasons for the reluctance of the banking sector to provide the much needed funds for SME in the construction industries for development, even though SME’s are regarded as the engine of economic growth. 1.5 Research Questions: Certain research questions will be drawn up for proper examination of this objective. These include: To what extent do commercial banks provide funds to Small and Medium Size Enterprises in the construction Industries? What are the main problems encountered by the construction companies in terms of securing loans and overdrafts from the commercial banks? What is responsible for the low investment of the private sector (SME’s) in Sierra Leone? What is the role of the central bank in facilitating credit creation for SME’s in the pursuit of development in Sierra Leone? What is the role of the Government ministry in the area of infrastructural developmental plans for Sierra Leone? The study will make use of secondary data received from the Bank of Sierra Leone, Commercial Banks and some of the registered construction companies in Sierra Leone. The study will try to reveal the reasons for the constraints Small and Medium size Enterprises are facing in securing credit facilities from the banks. Interviews will be conducted with senior officers of both the banking industries and construction sectors, together with government officers in the area of national development for the country. 1.6 Definition of Operational Terms: 1. Credit Creation: Credit creation is the multiple expansions of banks demand deposits. It is an open secret now that banks advance a major portion of their deposits to the borrowers and keep smaller parts of deposits to the customers on demand. 2. Venture Capital: Venture Capital is the name given to equity finance provided to support new, expanding and entrepreneurial businesses. Venture capitalists usually prefer to take a close interest in the business that is the subject of their investment. This could involve taking part in decision made by the business. Funds provided by venture capitalist are often referred to as private capital.(Mclaney E, 2003) 3. Gearing: Small businesses are in a fundamentally different position from that of the larger one on the issue of gearing. Financial risk to which capital gearing gives rise tends to emphasise operating risk, which will be present with or without gearing. Small businesses are more exposed to financial risk than public liability companies. (Mclaney, 2003) 4. Bank and Institutional Debt: Long term loans are available from banks and other financial institutions at both fixed and floating interest rates, provided the issuing bank is convinced that the purpose of the loan is a good one. The cost of bank loan is usually a floating rate of 3-6 percent above the base rate, depending on the perceived risk of the borrowing company. The issuing bank charges an arrangement fee on bank loans, which are usually secured by a fixed and floating charge, the nature of the charge depending on the availability of assets of good quality to act as security. A repayment schedule is often agreed between the bank and the borrowing company, structured to meet the specific needs of the borrower and in accordance with the lending policies of the bank. (Watson D Head A, 2007) 5. Security –the Bank’s Perspective: A bank has little to lose and much to gain by taking security for a loan. A bank’s solicitor should check that the borrower and any other party providing security have capacity to do so. (The company act 1989, prima facie, a company could pursue only the objects for which its memorandum stated it was incorporated) 6. Security – the Borrower’s Perspective: It is often difficult for a borrower to argue against a reasonable request for security. However, some borrowers will be contractually prohibited from providing security by a negative pledge in a document to which they are already a party. Specialised lending for financing a project will always be secured over the asset or project in question. (Adams D, 2006) 7. Cash Flow Statements for Small Companies: Financial Report Standard (FRS1) prescribes a format for cash flow statements. Except for very small companies, all companies are required to prepare a cash flow statement for each accounting period. There are two approaches available under the standard; the direct method which shows the operating cash receipts and payments summing to the net cash flow from operating activities, and the indirect method which identifies the net cash flow via reconciliation to operating profit. (Wood F, 2002). CHAPTER 2 Literature Review 2.0 Introduction The purpose of this chapter is to make a review of related literature on Small and Medium isze Enterprises and the Creation of Credit in the Construction Industry. With these literatures the researcher will have a better understanding of the study, as well as what has already been done on it in the form of previous research. 2.2 Definition of Small and Medium Size Enterprises A business can be considered small on basis of predetermined criteria such as the number of employees, annual turnover or capital employed. In the late 1990s, it was estimated that small businesses with fewer than 50 employees accounted for 99 per cent of all UK business, almost 50 per cent of non government employment and 42 per cent of turnover. Small firms have become a focus for governmental policy at both national and intergovernmental level. Bolton in his report in 1971 identified three main characteristics of a small firm: were independently owned The business securities are not quoted in any established capital market that is they are not traded in the efficient market. were managed in a personalised way- The ownership of the business’s equity and hence its control lie in the hands of a small close knit-group; that is it is a family type business. possessed a limited share of the total market 2.3 Nature of Small and Medium Size Enterprises The Bolton report, the first official government inquiry into small firms attempted to establish standard definitions of small firms for particular sector of industry based on numerical indicators of size such as sales or number of employees. A firm with 250 employees in a labour intensive industry may still be a small firm. (Brown, 1987) Criteria for Small and Medium Size Enterprises Size Category Number of Employees Maximum Annual Turnover (euros) Maximum Balance balance sheet total Micro Firm 0 -9 2 million euros 2 million Small Firm 10 – 49 10 million euros 10 million Medium-sized Firm 50 – 249 50 million 43 million 2.4 Objectives of Small and Medium Size Enterprises In SME’s the managers and the shareholders are likely to be substantially the same person or at least closely connected with one another. Thus agency problems, and their potential associated costs, are likely to have little or possibly no impact on the typical small business. Because of the elimination of agency gap, most managers of SME’s are shareholder; they would make decisions following a pure wealth-maximising goal more determinedly than would be the case in the typical large enterprise. The motives of managers or owners of small businesses are diverse. These motives might be the desire to experience the satisfaction of building up a business, a desire to lead a particular way of life, or a desire to keep someone (perhaps family) tradition alive. Since it is possible for managers to know the personal objectives of shareholders of small business, decisions can probably be made with these in mind. Both large and small businesses that makes a series of decisions causing the wealth to diminish, will sooner or later fail. Wealth maximisation goal is very important to small business and cannot be ignored. 2.5 Organisation of Small and Medium Enterprises The research will consider Small and Medium Size Enterprises in the construction industries that are organised as private limited companies. According to Mclaney (2003) private companies need be of no minimum size; public companies must issue at least  £50,000 of nominal share capital, of which 25% must be paid up. There is no upper limit on the size of a private company. Private companies are entitled to restrict the transfer of their shares; that is it is possible for the company’s Articles of Association to contain a clause giving the directors the power to refuse to register a transfer, at their discretion. While private companies must publish annual accounts, the volume of details is rather less than that which the law requires of public companies. 2.6 Sources of Finance for Small and Medium Size Enterprises Several inquires have dealt with the financing of SMEs and each of these enquires discovered, to a greater extent, that small businesses find it more difficult and more expensive to raise external finance. A particular problem faced by small businesses in their quest for equity capital is the lack of an `exit route’. Generally investors require that there be some way of liquidating their investment before they are prepared to commit funds to it. A number of schemes have been introduced to help small businesses: 2.6.1. The loan Guarantee Scheme (LGS) as first introduced in 1981 to cover situations were potential borrowers were unable to provide sufficient collateral or where the bank deem the risk of lending unacceptable. 2.6.2. The Enterprise Investment Scheme (EIS) – This scheme replaced the Business Expansion Scheme (BES) and it is designed to help small unquoted companies to raise equity finance from business angels 2.6.3.The Venture Capital Trust (VCT) – The trust was introduced in 1995 to encourage individuals to invest in smaller, unlisted trading companies. Venture Capital is the name given to equity finance provided to support new, expanding and entrepreneurial businesses. Venture capitalists usually prefer to take a close interest in the business. This could involve taking part in decision made by the business. Funds provided by venture capitalist are often referred to as private capital.(Mclaney E, 2003) 2.6.4. The Enterprise Fund (EF) it was announced in the competitiveness white paper in 1998 and is designed to help the financing of small businesses with growth potential. 2.6.5. The National Business Angel Network (NBAN) it was launched in 1999 to connect ‘business angels’ with companies seeking equity capital 2.6.6. The late payment of Commercial Debts (Interest) act 1998 gives certain small businesses a statutory right to claim interest from large businesses and the public sector on late payment of commercial debts. 2.7 Gearing Small businesses are in a fundamentally different position from that of the larger one on the issue of gearing. Financial risk to which capital gearing gives rise tends to emphasise operating risk, which will be present with or without gearing. Small businesses are more exposed to financial risk than public liability companies.(Mclaney,2003) 2.8 Help and Advice to Small Businesses One of the major barriers faced by SMEs is the lack of information, help and advice on their operations. Recent initiative to improve this sphere includes: 2.8.1. The business link network – organised in 1993 as a ‘one stop shop’ for information and advice to SMEs. It brings together the services of major business development services in the single accessible location. 2.8.2. The Enterprise Zone – launched in 1997 as a definitive internet site for business information. It provides help on a whole range of business issues. 2.8.3. The Information Society Initiative/Interforum E-Commerce Award – launched in 1999 as part of government’s e-commerce strategy. It is essentially an award scheme to recognise and reward best practice in the use of electronic trading among smaller firms. 2.9 Bank and Institutional Debt Long term loans are available from banks and other financial institutions at both fixed and floating interest rates, provided the issuing bank is convinced that the purpose of the loan is a good one. The cost of bank loan is usually a floating rate of 3-6 percent above the base rate, depending on the perceived risk of the borrowing company. The issuing bank charges an arrangement fee on bank loans, which are usually secured by a fixed and floating charge, the nature of the charge depending on the availability of assets of good quality to act as security. A repayment schedule is often agreed between the bank and the borrowing company, structured to meet the specific needs of the borrower and in accordance with the lending policies of the bank. (Watson D Head A, 2007) 2.10 Security –the Bank’s Perspective A bank has little to lose and much to gain by taking security for a loan. A bank’s solicitor should check that the borrower and any other party providing security have capacity to do so. (The company act 1989, prima facie, a company could pursue only the objects for which its memorandum stated it was incorporated) 2.11 Security – the Borrower’s Perspective It is often difficult for a borrower to argue against a reasonable request for security. However, some borrowers will be contractually prohibited from providing security by a negative pledge in a document to which they are already a party. Specialised lending for financing a project will always be secured over the asset or project in question. (Adams D,2006) 2.12 Working Capital Problems of the Small Business Working capital is the difference between current assets over current liabilities. The amount invested by businesses in working capital is often high in proportion to the total assets employed. It is important that these amounts are managed properly. It is often claimed that many small businesses suffer from a lack of capital and, where this is the case, tight control over working capital investment becomes critical. There are evidence, however, that SB are not very good at managing their working capital, and this has been cited as the major cause of their high failure rate compared with that of large businesses. 2.13 Credit Management Small businesses don’t have the resources to manage their trade debtors (account receivables) effectively. Most small businesses don’t have a credit control department. Small business also lack proper debt collection procedures, such as prompt invoicing and sending out regular statements. These risks probably tend to increase where there is an excessive concern for growth. In an attempt to increase sales, small businesses may be too willing to extend credit to customers that are poor credit risk Lack of market power is another issue for small businesses. They find themselves in a weak position when negotiating credit terms with larger businesses. When big customer exceeds the terms of credit, the small supplier may feel inhibited from pressing the customer for payment in case future sales are lost. (A survey undertaken by the Credit Management Research Centre (CMRC) during April and June, 2003, indicates that small businesses are likely to have to wait an average of 60 days for their trade debtors to pay. 2.14 Cash Flow Statements for Small Companies Financial Report Standard (FRS1) prescribes a format for cash flow statements. Except for very small companies, all companies are required to prepare a cash flow statement for each accounting period. There are two approaches available under the standard; the direct method which shows the operating cash receipts and payments summing to the net cash flow from operating activities, and the indirect method which identifies the net cash flow via reconciliation to operating profit.(Wood F,2002) Credit Creation 2.15 Definition of Credit Creation The BNET business dictionary defines credit creation as the collective ability of lenders to make money available to borrowers. Credit creation is the multiple expansions of banks demand deposits. Banks advance a major portion of their deposits to the borrowers and keep smaller parts of deposits to customers on demand. The tendency on the part of commercial banks to expand their demand deposits as a multiple of their excess cash reserve is called creation of credit. 2.16 Functions of Financial Intermediation in Credit Creation Financial intermediation is the process of channelling funds between those who wish to lend or invest and those who wish to borrow or require investment funds. Financial intermediaries act as principal, creating new financial assets and liabilities. They do not act solely as agents, charging a commission for their services. (The Monetary and Financial System-CIB/BPP Publication 1993 Edition) Any institution standing between the ultimate provider of funds and the ultimate user of funds is engaged in financial intermediation. There are many types of institutions and other organisations that act as intermediaries in matching firms and individuals who need finance with those who wish to invest. These institutions also provide other services which are non-intermediary services like financial advisory services, fund management services and advice to undertakers and mergers provider by merchant banks. Some of the organisation that acts as financial intermediaries is as follows: 2.16.1 Clearing Banks – this bank participate in system which simplifies daily payment so that all the thousands of individual customer payments are reduced to a few transfers of credit between the banks. They offer various accounts to investors and provide large amount of short to medium-term loans to the business sector and the personal sector. The work of these institutions can best be understood through a consideration of the main items in their balance sheet. 2.16.2 Clearing Bank Liabilities – The money from the banks responsible comes chiefly from their customer’s sight and time deposits- mostly current and deposit accounts with which most people are familiar. An important additional item relates to certificates of deposit. These are issued generally for a medium amount of  £50,000 and a maximum of  £500,000 with an initial term to maturity of from three months to five years. Clearing Bank Assets Customers’ money is re-lent in a variety of ways. The main aim of the bank is to have a range of lending instruments of varying terms so that money can be recovered quickly and yet, at the same time, earn the maximum return. 2.16.3 Investment Banks / Merchant Banks The investment banks or Merchant banks have some functions that they undertake: 2.16.3.i Financial Advice to Business Firms Few manufacturing or commercial companies of any size can now afford to be without the advice of a merchant bank. Such advice is necessary in order to obtain investment capital, to invest surplus funds, to guard against takeover, or to take over others. Increasingly, the merchant banks have themselves become activity involved in the financial management of their business client and have had an influence over the direction these affairs have taken. 2.16.3.ii Providing Finance to Business Merchant banks also compete in the services of leasing, factoring, hire-purchase and general lending. They are also the gateway to the capital market for long-term funds because they are likely to have specified departments handling capital issues as ‘issuing houses’. 2.16.4 Foreign Trade A lot of merchant bank are active in the promotion of foreign trade by providing marine insurance, credits, and assistance in appointing foreign agents and arranging foreign payments. Merchant bank is essentially in the general business of creating wealth and of helping those who show that they are capable of successful business enterprise. It is expected that merchant banks will operate without the large branch network necessary for a clearing bank, they work closely with their clients and be more ready to take business risk and promote business enterprise than clearing bank. 2.16.5 Building Societies These take deposits from the household sector and lend to individuals buying their own homes. They have recently grown rapidly in the UK and now provide many of the services offered by clearing banks. Over the years many have converted to banks. 2.16.6 Finance Companies/Houses – Providing medium-term instalment credits to the business and personal sector. These are usually owned by business sector firms or by other financial itermediaries. 2.17 Services Provided by Financial Institutions Financial institutions are organisations that provide services in connection with one or more of the following:- Financial intermediation, linking ultimate providers of funds with ultimate users and creating new financial assets in the process. Exchanging financial assets on behalf of their customers, that is acting as brokers or agents for clients. Exchanging financial assets for their own accounts proprietary dealers, as they are termed. Helping to create financial assets for their customers, and then selling these assets to others in the market underwriting new share issues, for example Providing investment advice to others, example to people seeking a personal pension or to firms on mergers and takeovers. Fund management- managing the whole or part of a pension fund, for example some large non-financial companies have their own financial subsidiaries. In the United Kingdom Ford Motor Finance and Mark and Spencer Finance Se Development of Credit Facilities in Sierra Leone Development of Credit Facilities in Sierra Leone Chapter 1 This study is on the creation of credit facilities to Small and Medium Size Enterprises in Sierra Leone with special focus on the construction industries. 1.1 Background to the Economy of Sierra Leone Sierra Leone is a relatively small country, on the West Coast of Africa with an area of approximately 28,000square miles. The estimated population is 5.5 million inhabitants, 30% of whom resides in the western area of the country according to recent census in 2006. The state of the country’s economy, immediately after independence from the British Colony in 1961 up to the 1970’s, was quite satisfactory in terms of performance. The exchange rate between the Leone and other foreign currencies was relatively good. More so, the British Pound Sterling was exchanged at One pound ( £1) to One Leone (Le1). The inflation rate was extremely low. The country’s earnings from exports were very much attractive, with Diamond export accounting for well over 50% of the country’s foreign exchange earnings. This was closely followed by cash crop exports such as Cocoa, coffee, oil palm, piassava and chillies. The country’s external debt position at this time was not high, Between 1972 to 1975, the economy started experiencing down turn that was mainly due to external factors, such as the famous oil price shock in 1973. Naturally, the 1980 Organisation of Africa Unity (OAU) summit that was hosted by the government of Sierra Leone fuelled the debt crisis in Sierra Leone. Because of the foreign exchange scarcity in the country, the credit agreement between domestic importers and their business partners aboard collapsed. In 1988, the country was forced to devalue her currency. Between 1992 and 1994, Sierra Leone successfully implemented an adjustment program supported by the International Monetary Fund (IMF) under the Right Accumulation Program (RAP). The World Bank also supported the program through the Reconstruction of Import Credit (RIC) in 1992 and the Structural Adjustment Credit (SAC) in 1993. Following the successful implementation of the RAP, the IMF approved a three year arrangement support under Enhanced Structural Adjustment Facility (ESAF). The implementation of the first annual program was disrupted by the escalation of the rebel activities in 1995. With the return of democracy in 1996, the IMF supported the economic recovery program adopted by the new Government with a second annual program under the ESAF. Poverty intensified with real per capita declining to US$142 in 2000. Since then Sierra Leone has been classified as the poorest country in the world and ranks at the bottom of the United Nations Development Programme (UNDP) Human Development Index. The growth in the economy has been underpinned by broad recovery in Agriculture, mining, manufacturing, construction and the service sector. The economy of the Country continues to worsen in early 1992 when the civil unrest started which causes untold sufferings on humans and the entire country. Many people were forced out of their houses and eventually became displaced persons and refugees in their own country and neighbouring country like Guinea, The Gambia and Ghana. Almost all segments of the business economy collapsed including banking and lending institutions. It was then the problems of growth in economy worsen and every thing completely deteriorated and collapsed. The almost 11 years of civil unrest ended in March 2002. The end of the war actually opens the door for a new beginning, for new economic growth and prosperity in the face of peace and unity. The situation has recently worsened because of the credit crunch faced by many of the world famous banking institutions and Sierra Leone has not been any exceptions. The effect coupled with other factors has created more gaps for banking institutions to provide loans to small and medium enterprises. In a press release from Prlog Dec. 15, 2008 by Robin Trehan as quoted â€Å"SMEs represent over ninety-nine percent of the country’s employers. While it is essential that these businesses obtain the necessary funding to remain active, they are often the first to suffer when financial crisis hits. Banks already facing financial hardship often deem SMEs as too risky to finance. Credit terms are becoming increasingly harder and qualifying for financing is subject to much stricter guidelines. The re are things that SMEs can do, however, to increase their chances of finding financing†. 1.2 Statement of the Problem The term credit in this thesis refers to an amount or sum placed at a person’s disposal by a bank and usually to be repaid with interest within a given period of time. Small and Medium Size Enterprises (SME) is very important in terms of the dynamic role in the development of the private sector in Sierra Leone. The SME’s are regarded as an engine for any economic growth and development in any country. They provide opportunities for job creation and expansion in the physical reconstruction of the economy especially for a post war development country like Sierra Leone. Majority of the physical infrastructures ranging from housing, office buildings and business structures were all destroyed during the civil unrest. These structures need to be reconstructed for the economy to grow and become prosper. Today many construction companies or firms have emerged to assist in the rehabilitation and reconstruction. While there may be some of the construction companies who have existed of years, it is also true that majority of these construction companies are new ones who are just coming up to help and provide their expertise in the development of Sierra Leone. But yet still, it is a challenge for many of these companies to adequately involve in the process of rehabilitation and reconstruction simply because they cannot get the required finance in the form of overdraft or loans, or provide the necessary collateral for the banks as required, making them less competitive. In Sierra Leone the performance of SME’s over the years has been very poor which is due to the fact that the creation of credit from the banks which is an essential stimulant for private investment in the construction industries has been grossly under performing. This is one of the reasons for poor performance of the economy in terms of growth in most developing countries including Sierra Leone. Construction companies have not been able to access huge funds by way of loan over the years from the banking and other financial institutions, mainly due to lack of confidence in the private sector as a result of problems like moral hazards and the absence of collateral security and the lack of experience in construction engineering. 1.3 Justification of the Study The importance of the construction industries in the process of rehabilitation and reconstruction of the war towns in Sierra Leone cannot be over-emphasized. During the war there was so much destruction of infrastructures in the country, now that there is peace there is high need for reconstructions and the development of new roads and structures to aid national growth. International organisations like the International Monetary Fund (IMF), World Bank, African Development Bank (ADB) main focus is to assist Small Medium Size Enterprises (SME) in developing countries gain strong financial base. It had been felt that SMEs employ majority of the work force in the developing countries, therefore, they have realised that when SME become financially stable the economy of the nation will be better and that the citizens will be able to live a comfortable life. The role of commercial banks and other financial institutions in private sector development and the assessment of their overall performance in terms of economic growth and development has not received much of the attention by researchers. The central bank maintaining interest rate at high level has greatly contributed to discourage SMEs from borrowing from retail banks and other financial institution for investment purposes. This is one of the reasons why most SMEs are under developed. Besides commercial banks are requesting for very stiff conditions to access loan by the private sector. A study on the provision of credit to construction companies for investment towards economic growth has not been studied in greater detail by previous researchers. This among others, gave me the urge to probe into the activities of the commercial banks and other financial institutions in the creation of credit to construction companies in Sierra Leone, This study is to help government and other professionals as well as other stakeholders, to grasp fully the implications of credit refusal to small and medium size enterprises and how it will affect the development of the nation. The result of this study is hope to enable banking and other financial institutions, local and national government and other stakeholders to device concrete ways by which small and medium size enterprises can easily get access to credit to undertake construction programmes. 1.4 Objectives of the study The main aim of the study is to assess the implications of credit creations by the banks and other financial institutions to Small and Medium Size Enterprises with special focus on the Construction Industries for economic growth and development in Sierra Leone. The specific objectives are: To determine the extent to which banks have been contributing to the development of the construction industries in Sierra Leone. To examine some of the reasons responsible for the inability of the construction industries to solicit loans from the banks and other financial institutions for the purpose of investment. To establish reasons for the reluctance of the banking and other financial institutions to provide the much needed funds for private sector development. To examine the reasons for the reluctance of the banking sector to provide the much needed funds for SME in the construction industries for development, even though SME’s are regarded as the engine of economic growth. 1.5 Research Questions: Certain research questions will be drawn up for proper examination of this objective. These include: To what extent do commercial banks provide funds to Small and Medium Size Enterprises in the construction Industries? What are the main problems encountered by the construction companies in terms of securing loans and overdrafts from the commercial banks? What is responsible for the low investment of the private sector (SME’s) in Sierra Leone? What is the role of the central bank in facilitating credit creation for SME’s in the pursuit of development in Sierra Leone? What is the role of the Government ministry in the area of infrastructural developmental plans for Sierra Leone? The study will make use of secondary data received from the Bank of Sierra Leone, Commercial Banks and some of the registered construction companies in Sierra Leone. The study will try to reveal the reasons for the constraints Small and Medium size Enterprises are facing in securing credit facilities from the banks. Interviews will be conducted with senior officers of both the banking industries and construction sectors, together with government officers in the area of national development for the country. 1.6 Definition of Operational Terms: 1. Credit Creation: Credit creation is the multiple expansions of banks demand deposits. It is an open secret now that banks advance a major portion of their deposits to the borrowers and keep smaller parts of deposits to the customers on demand. 2. Venture Capital: Venture Capital is the name given to equity finance provided to support new, expanding and entrepreneurial businesses. Venture capitalists usually prefer to take a close interest in the business that is the subject of their investment. This could involve taking part in decision made by the business. Funds provided by venture capitalist are often referred to as private capital.(Mclaney E, 2003) 3. Gearing: Small businesses are in a fundamentally different position from that of the larger one on the issue of gearing. Financial risk to which capital gearing gives rise tends to emphasise operating risk, which will be present with or without gearing. Small businesses are more exposed to financial risk than public liability companies. (Mclaney, 2003) 4. Bank and Institutional Debt: Long term loans are available from banks and other financial institutions at both fixed and floating interest rates, provided the issuing bank is convinced that the purpose of the loan is a good one. The cost of bank loan is usually a floating rate of 3-6 percent above the base rate, depending on the perceived risk of the borrowing company. The issuing bank charges an arrangement fee on bank loans, which are usually secured by a fixed and floating charge, the nature of the charge depending on the availability of assets of good quality to act as security. A repayment schedule is often agreed between the bank and the borrowing company, structured to meet the specific needs of the borrower and in accordance with the lending policies of the bank. (Watson D Head A, 2007) 5. Security –the Bank’s Perspective: A bank has little to lose and much to gain by taking security for a loan. A bank’s solicitor should check that the borrower and any other party providing security have capacity to do so. (The company act 1989, prima facie, a company could pursue only the objects for which its memorandum stated it was incorporated) 6. Security – the Borrower’s Perspective: It is often difficult for a borrower to argue against a reasonable request for security. However, some borrowers will be contractually prohibited from providing security by a negative pledge in a document to which they are already a party. Specialised lending for financing a project will always be secured over the asset or project in question. (Adams D, 2006) 7. Cash Flow Statements for Small Companies: Financial Report Standard (FRS1) prescribes a format for cash flow statements. Except for very small companies, all companies are required to prepare a cash flow statement for each accounting period. There are two approaches available under the standard; the direct method which shows the operating cash receipts and payments summing to the net cash flow from operating activities, and the indirect method which identifies the net cash flow via reconciliation to operating profit. (Wood F, 2002). CHAPTER 2 Literature Review 2.0 Introduction The purpose of this chapter is to make a review of related literature on Small and Medium isze Enterprises and the Creation of Credit in the Construction Industry. With these literatures the researcher will have a better understanding of the study, as well as what has already been done on it in the form of previous research. 2.2 Definition of Small and Medium Size Enterprises A business can be considered small on basis of predetermined criteria such as the number of employees, annual turnover or capital employed. In the late 1990s, it was estimated that small businesses with fewer than 50 employees accounted for 99 per cent of all UK business, almost 50 per cent of non government employment and 42 per cent of turnover. Small firms have become a focus for governmental policy at both national and intergovernmental level. Bolton in his report in 1971 identified three main characteristics of a small firm: were independently owned The business securities are not quoted in any established capital market that is they are not traded in the efficient market. were managed in a personalised way- The ownership of the business’s equity and hence its control lie in the hands of a small close knit-group; that is it is a family type business. possessed a limited share of the total market 2.3 Nature of Small and Medium Size Enterprises The Bolton report, the first official government inquiry into small firms attempted to establish standard definitions of small firms for particular sector of industry based on numerical indicators of size such as sales or number of employees. A firm with 250 employees in a labour intensive industry may still be a small firm. (Brown, 1987) Criteria for Small and Medium Size Enterprises Size Category Number of Employees Maximum Annual Turnover (euros) Maximum Balance balance sheet total Micro Firm 0 -9 2 million euros 2 million Small Firm 10 – 49 10 million euros 10 million Medium-sized Firm 50 – 249 50 million 43 million 2.4 Objectives of Small and Medium Size Enterprises In SME’s the managers and the shareholders are likely to be substantially the same person or at least closely connected with one another. Thus agency problems, and their potential associated costs, are likely to have little or possibly no impact on the typical small business. Because of the elimination of agency gap, most managers of SME’s are shareholder; they would make decisions following a pure wealth-maximising goal more determinedly than would be the case in the typical large enterprise. The motives of managers or owners of small businesses are diverse. These motives might be the desire to experience the satisfaction of building up a business, a desire to lead a particular way of life, or a desire to keep someone (perhaps family) tradition alive. Since it is possible for managers to know the personal objectives of shareholders of small business, decisions can probably be made with these in mind. Both large and small businesses that makes a series of decisions causing the wealth to diminish, will sooner or later fail. Wealth maximisation goal is very important to small business and cannot be ignored. 2.5 Organisation of Small and Medium Enterprises The research will consider Small and Medium Size Enterprises in the construction industries that are organised as private limited companies. According to Mclaney (2003) private companies need be of no minimum size; public companies must issue at least  £50,000 of nominal share capital, of which 25% must be paid up. There is no upper limit on the size of a private company. Private companies are entitled to restrict the transfer of their shares; that is it is possible for the company’s Articles of Association to contain a clause giving the directors the power to refuse to register a transfer, at their discretion. While private companies must publish annual accounts, the volume of details is rather less than that which the law requires of public companies. 2.6 Sources of Finance for Small and Medium Size Enterprises Several inquires have dealt with the financing of SMEs and each of these enquires discovered, to a greater extent, that small businesses find it more difficult and more expensive to raise external finance. A particular problem faced by small businesses in their quest for equity capital is the lack of an `exit route’. Generally investors require that there be some way of liquidating their investment before they are prepared to commit funds to it. A number of schemes have been introduced to help small businesses: 2.6.1. The loan Guarantee Scheme (LGS) as first introduced in 1981 to cover situations were potential borrowers were unable to provide sufficient collateral or where the bank deem the risk of lending unacceptable. 2.6.2. The Enterprise Investment Scheme (EIS) – This scheme replaced the Business Expansion Scheme (BES) and it is designed to help small unquoted companies to raise equity finance from business angels 2.6.3.The Venture Capital Trust (VCT) – The trust was introduced in 1995 to encourage individuals to invest in smaller, unlisted trading companies. Venture Capital is the name given to equity finance provided to support new, expanding and entrepreneurial businesses. Venture capitalists usually prefer to take a close interest in the business. This could involve taking part in decision made by the business. Funds provided by venture capitalist are often referred to as private capital.(Mclaney E, 2003) 2.6.4. The Enterprise Fund (EF) it was announced in the competitiveness white paper in 1998 and is designed to help the financing of small businesses with growth potential. 2.6.5. The National Business Angel Network (NBAN) it was launched in 1999 to connect ‘business angels’ with companies seeking equity capital 2.6.6. The late payment of Commercial Debts (Interest) act 1998 gives certain small businesses a statutory right to claim interest from large businesses and the public sector on late payment of commercial debts. 2.7 Gearing Small businesses are in a fundamentally different position from that of the larger one on the issue of gearing. Financial risk to which capital gearing gives rise tends to emphasise operating risk, which will be present with or without gearing. Small businesses are more exposed to financial risk than public liability companies.(Mclaney,2003) 2.8 Help and Advice to Small Businesses One of the major barriers faced by SMEs is the lack of information, help and advice on their operations. Recent initiative to improve this sphere includes: 2.8.1. The business link network – organised in 1993 as a ‘one stop shop’ for information and advice to SMEs. It brings together the services of major business development services in the single accessible location. 2.8.2. The Enterprise Zone – launched in 1997 as a definitive internet site for business information. It provides help on a whole range of business issues. 2.8.3. The Information Society Initiative/Interforum E-Commerce Award – launched in 1999 as part of government’s e-commerce strategy. It is essentially an award scheme to recognise and reward best practice in the use of electronic trading among smaller firms. 2.9 Bank and Institutional Debt Long term loans are available from banks and other financial institutions at both fixed and floating interest rates, provided the issuing bank is convinced that the purpose of the loan is a good one. The cost of bank loan is usually a floating rate of 3-6 percent above the base rate, depending on the perceived risk of the borrowing company. The issuing bank charges an arrangement fee on bank loans, which are usually secured by a fixed and floating charge, the nature of the charge depending on the availability of assets of good quality to act as security. A repayment schedule is often agreed between the bank and the borrowing company, structured to meet the specific needs of the borrower and in accordance with the lending policies of the bank. (Watson D Head A, 2007) 2.10 Security –the Bank’s Perspective A bank has little to lose and much to gain by taking security for a loan. A bank’s solicitor should check that the borrower and any other party providing security have capacity to do so. (The company act 1989, prima facie, a company could pursue only the objects for which its memorandum stated it was incorporated) 2.11 Security – the Borrower’s Perspective It is often difficult for a borrower to argue against a reasonable request for security. However, some borrowers will be contractually prohibited from providing security by a negative pledge in a document to which they are already a party. Specialised lending for financing a project will always be secured over the asset or project in question. (Adams D,2006) 2.12 Working Capital Problems of the Small Business Working capital is the difference between current assets over current liabilities. The amount invested by businesses in working capital is often high in proportion to the total assets employed. It is important that these amounts are managed properly. It is often claimed that many small businesses suffer from a lack of capital and, where this is the case, tight control over working capital investment becomes critical. There are evidence, however, that SB are not very good at managing their working capital, and this has been cited as the major cause of their high failure rate compared with that of large businesses. 2.13 Credit Management Small businesses don’t have the resources to manage their trade debtors (account receivables) effectively. Most small businesses don’t have a credit control department. Small business also lack proper debt collection procedures, such as prompt invoicing and sending out regular statements. These risks probably tend to increase where there is an excessive concern for growth. In an attempt to increase sales, small businesses may be too willing to extend credit to customers that are poor credit risk Lack of market power is another issue for small businesses. They find themselves in a weak position when negotiating credit terms with larger businesses. When big customer exceeds the terms of credit, the small supplier may feel inhibited from pressing the customer for payment in case future sales are lost. (A survey undertaken by the Credit Management Research Centre (CMRC) during April and June, 2003, indicates that small businesses are likely to have to wait an average of 60 days for their trade debtors to pay. 2.14 Cash Flow Statements for Small Companies Financial Report Standard (FRS1) prescribes a format for cash flow statements. Except for very small companies, all companies are required to prepare a cash flow statement for each accounting period. There are two approaches available under the standard; the direct method which shows the operating cash receipts and payments summing to the net cash flow from operating activities, and the indirect method which identifies the net cash flow via reconciliation to operating profit.(Wood F,2002) Credit Creation 2.15 Definition of Credit Creation The BNET business dictionary defines credit creation as the collective ability of lenders to make money available to borrowers. Credit creation is the multiple expansions of banks demand deposits. Banks advance a major portion of their deposits to the borrowers and keep smaller parts of deposits to customers on demand. The tendency on the part of commercial banks to expand their demand deposits as a multiple of their excess cash reserve is called creation of credit. 2.16 Functions of Financial Intermediation in Credit Creation Financial intermediation is the process of channelling funds between those who wish to lend or invest and those who wish to borrow or require investment funds. Financial intermediaries act as principal, creating new financial assets and liabilities. They do not act solely as agents, charging a commission for their services. (The Monetary and Financial System-CIB/BPP Publication 1993 Edition) Any institution standing between the ultimate provider of funds and the ultimate user of funds is engaged in financial intermediation. There are many types of institutions and other organisations that act as intermediaries in matching firms and individuals who need finance with those who wish to invest. These institutions also provide other services which are non-intermediary services like financial advisory services, fund management services and advice to undertakers and mergers provider by merchant banks. Some of the organisation that acts as financial intermediaries is as follows: 2.16.1 Clearing Banks – this bank participate in system which simplifies daily payment so that all the thousands of individual customer payments are reduced to a few transfers of credit between the banks. They offer various accounts to investors and provide large amount of short to medium-term loans to the business sector and the personal sector. The work of these institutions can best be understood through a consideration of the main items in their balance sheet. 2.16.2 Clearing Bank Liabilities – The money from the banks responsible comes chiefly from their customer’s sight and time deposits- mostly current and deposit accounts with which most people are familiar. An important additional item relates to certificates of deposit. These are issued generally for a medium amount of  £50,000 and a maximum of  £500,000 with an initial term to maturity of from three months to five years. Clearing Bank Assets Customers’ money is re-lent in a variety of ways. The main aim of the bank is to have a range of lending instruments of varying terms so that money can be recovered quickly and yet, at the same time, earn the maximum return. 2.16.3 Investment Banks / Merchant Banks The investment banks or Merchant banks have some functions that they undertake: 2.16.3.i Financial Advice to Business Firms Few manufacturing or commercial companies of any size can now afford to be without the advice of a merchant bank. Such advice is necessary in order to obtain investment capital, to invest surplus funds, to guard against takeover, or to take over others. Increasingly, the merchant banks have themselves become activity involved in the financial management of their business client and have had an influence over the direction these affairs have taken. 2.16.3.ii Providing Finance to Business Merchant banks also compete in the services of leasing, factoring, hire-purchase and general lending. They are also the gateway to the capital market for long-term funds because they are likely to have specified departments handling capital issues as ‘issuing houses’. 2.16.4 Foreign Trade A lot of merchant bank are active in the promotion of foreign trade by providing marine insurance, credits, and assistance in appointing foreign agents and arranging foreign payments. Merchant bank is essentially in the general business of creating wealth and of helping those who show that they are capable of successful business enterprise. It is expected that merchant banks will operate without the large branch network necessary for a clearing bank, they work closely with their clients and be more ready to take business risk and promote business enterprise than clearing bank. 2.16.5 Building Societies These take deposits from the household sector and lend to individuals buying their own homes. They have recently grown rapidly in the UK and now provide many of the services offered by clearing banks. Over the years many have converted to banks. 2.16.6 Finance Companies/Houses – Providing medium-term instalment credits to the business and personal sector. These are usually owned by business sector firms or by other financial itermediaries. 2.17 Services Provided by Financial Institutions Financial institutions are organisations that provide services in connection with one or more of the following:- Financial intermediation, linking ultimate providers of funds with ultimate users and creating new financial assets in the process. Exchanging financial assets on behalf of their customers, that is acting as brokers or agents for clients. Exchanging financial assets for their own accounts proprietary dealers, as they are termed. Helping to create financial assets for their customers, and then selling these assets to others in the market underwriting new share issues, for example Providing investment advice to others, example to people seeking a personal pension or to firms on mergers and takeovers. Fund management- managing the whole or part of a pension fund, for example some large non-financial companies have their own financial subsidiaries. In the United Kingdom Ford Motor Finance and Mark and Spencer Finance Se

Linear B Archives and the Mycenaean World

Linear B Archives and the Mycenaean World What contribution do the Linear B archives make to understanding the Mycenaean world in respect of one of the following: social organisation, cult practices, stock breeding and agriculture, warfare, bronze working? The Linear B archives provide us with the earliest primary evidence about Mycenaean palatial civilisations[1] and an unparalleled insight into the nature of Mycenaean warfare. The archives consist of approximately five thousand clay records[2] and contain information on armour, weapons, chariots, naval warfare and subsidiary details about possible troops. The importance of these documents is greatly enhanced by the complete lack of historical accounts[3] from this era, and also the fact that nearly all of the ideograms used in the archives are devoted to armour, weaponry, horses and chariots[4] means that they are of intrinsic value to the understanding of warfare in the Mycenaean world. However, there are limitations with the Linear B archives, particularly in terms of their chronological range, inventory style and perhaps bias representation of the importance of warfare under normal circumstances. It is also important to consider what other discoveries have made vital contributions to our understanding of Mycenaean warfare, such as the palaces themselves, surviving weapons and representations of war or armour in art. Since all of the tablets come from the palatial centres, one of their most important contributions is that they tell us directly about the economies of the palaces and that their main focus’ were ‘military preparedness’[5], defensive strategies and the wealth to support these things. The Linear B archives record information about the production, refurbishment and also the distribution[6] of many different types of military equipment. It is possible to interpret from the archives, that the Mycenaean’s used a very centralised system to gather and organise military equipment and that this was based around the main palatial complex. Evidence for this can be seen in a tablet from Pylos which lists sixteen different places that were responsible for supplying an amount of bronze in the form of heads for arrows and spears[7]. The tablets also directly show the extent that these palaces were concerned with having a fully equipped force[8], this is mainly due to the sheer number of references to armour and weapons throughout the archives. The many tablets depicting armour are especially useful when trying to understand Mycenaean warfare. Tablets at Tiryns[9], Pylos and Knossos all record suits of armour and provide us with evidence for the use of armour across a wider range of palatial centres than archaeological finds would suggest. At Pylos the tablets mention at least twenty suits of armour with the ideograms for a cuirass and a helmet, and at Dendra there are at least one hundred and forty suits recorded in the chariot tablet[10]. The ideograms themselves are of great value because form them you can see the style and type of armour which is very similar to the suit which was discovered at Dendra and those described by Homer[11]. Not only do the archives provide evidence for the use of armour they also give us some indication of the value of the armour itself. In some tablets the ideogram for armour is replaced with one for a bronze ingot[12], this could be interpreted as a representative of the value of the armour or perhaps as an approximate quantity of material used to make the armour itself. A further contribution made by the archives is the existence of an illustration on the reverse of a tablet. The drawing shows a man wearing greaves and drawing his sword, and was probably the work of a scribe while he was waiting to make his recordings[13]. This is particularly interesting as it allows us to see the influence that warfare may have had on a member of Mycenaean society who chose to sketch this scene and its shows the weapon and armour which was associated with a soldier. Weapons are an essential part of warfare and were a major resource recorded in the tablets. The importance of weapons to the Mycenaean’s can be clearly seen in a tablet from Pylos which records a quantity of recycled bronze by the number of arrow or spearheads it would be able to make[14]. The tablets also contribute to our knowledge of which materials were being used to manufacture weapons, for example we can tell that most weapons were being made from bronze because articles of iron were never mentioned in the tablets[15]. The use of ideograms to depict weapons allows us to partly see how the weapons would be used; thrusting spears, throwing javelins, slings and bows are all shown in the tablets[16]. The ideograms are also useful because it is possible to compare types of swords or daggers by looking at what is different between each separate ideogram. In the Linear B archives there have been large numbers of tablets devoted to chariots or their trappings. Many of these regions have rough terrain so this is often seen as particularly surprising. One example is the region around Knossos, which was, and still is, especially mountainous and the only way to use a chariot would be to bring it to the beach or to the plains some distance away[17]. Records relating to chariots include; a tablet from Pylos listing one hundred and fifty one chariot wheels[18], and the Knossos tablets featuring several hundred chariots and spare parts[19] along with individual inventories which record a name, chariot, horses and a suit of armour[20]. However, of particular interest in terms of chariots are a few texts from Knossos and Pylos. The first, from Knossos, records the distribution of defensive armour to each of the chariot crew[21]. The texts from Pylos, which were found in the Northeast Workshop, list leather items that relate to chariots, some examples are reigns, halters, bridals and saddlebags[22]. These groups of tablets provide us with information that not only supports the other Linear B evidence, but also archaeological finds as well. The archives have far more limited information in terms of naval warfare. At Pylos there are some unclear references to over six hundred ‘rowers’[23], and lists of coastal settlements[24], when considered together, these could be interpreted as naval organisation or defensive preparations. A further important addition to our knowledge of naval warfare is the drawing found on the reverse of a tablet in Pylos, its shows an image of a ship. The image is not only comparable to an ideogram used on a tablet from Knossos, but it also resembles the ships used not by the Mycenaeans but the Minoans[25]. One could argue that there were possible overlaps in the style of ships used from the Minoan period into the Mycenaean era. The contributions made by Linear B are undeniable, but on the other hand it is also vital to consider the disadvantages that these archives have. The records themselves were not intended to be long lasting[26] as they were only preserved by chance. They are in a way comparable to the modern post-it note: a disposable, cheap and transportable way of recording data. The survival of the tablets is also completely random[27], which means that we are often left with fragmented topics and it impossible to tell how complete the archives we have are. The archives are also only based on a certain group of palatial centres and so there is a possibility that there were some differences existing between these and others[28]. Thus meaning that using the archives to get a picture of the entire Mycenaean world is not reliable. A further problem with the tablets is the possibility that there are inaccurate. For example, those found in the ‘Room of the Chariot tablets’, have been interpreted, by some, to be scribal exercises and not genuine records, the reason for this interpretation is that they were all written by different hands in the same characteristic style[29]. If this was the case then much of our evidence for chariots would no longer be valid and the argument for their use in mountainous areas would be far weaker. The archives also have huge chronological limitations in terms of their range as they are either limited to the last year or so before the destruction of the palaces, or they are random undated years[30]. The maximum range of the archives has been dated to between fourteen hundred and twelve hundred BC, and each of the documents only refers to the current year[31]. This makes it extremely difficult to ascertain information regarding trends or patterns across the whole of the Mycenaean era. It is also important to take into consideration that these records represent what can only be seen as a period of unrest for the Mycenaean civilisations. The year before the destruction of the palaces would have probably been far more militaristic than ordinary day to day life. In the tablets we see examples of special provisions made for this time of warfare, one such example was Bronze smiths being excused from having to pay tax because they were so busy making weapons[32]. The tablets from Pylos include records of contributions of gold[33] and specific weights of bronze[34] from local officials; it could be possible that this was to finance the war effort. These records may then be giving us unbalanced view of the priorities of the Mycenaeans, and that perhaps under less pressing times there is a much smaller focus on warfare. Since the Linear archives are almost entirely made up of inventories[35], it is exceptionally difficult to understand either how objects were used or the nature of warfare itself in the Mycenaean world. This is particularly significant when you consider that none of the documents record the existence of an actual army[36]. It seems evident that although the archives provide us with a great amount of information, they do have their limitations. In order to fully understand Mycenaean warfare it is also necessary to consider the archaeological evidence that we have available. For example, the palaces themselves show evidence of a need for strong defences. The building works which took place before their destruction are a clear indication of preparation for sieges and attacks; in particular the introduction of water supplies[37] that would allow those inside the walls to survive, even under a long term siege. Furthermore the contributions in terms weaponry from the archives are much more valuable to us when we use it alongside actual surviving weapons and armour. One of the most important discoveries was the Dendra armour, a full bronze corslet and neckpiece[38] which is made from a number of individual sheets of bronze[39]. Armours of this type were recorded in tablets at both Knossos and Pylos[40] and the armour type can be clearly recognised by the ideograms themselves. We can also use comparisons between archaeological evidence and the tablets to trace different types of sword, and by doing so it is possible to see some possible changes in military practices[41]. Since the archives consist mostly of inventories it is useful to see these items as represented by the Mycenaeans, in particular through art, which gives us the opportunity to see depictions of chariots, weapons and armour in use. One such example of this is the ‘Silver Siege Ryhton’ from Shaft Grave four, which depicts an attack on a walled settlement[42]. What is particularly interesting is that this is a seaborne attack and so could link to the tablets listing coastal settlements from Pylos; it also shows an archer[43] which supports information on weaponry. Another vessel which provides useful information is the ‘Warrior Vase’ from Mycenae, this shows six men marching on each side of the vase. The men all wear white spotted, horned helmets, and carry spears and shields. They wear greaves, short fringed skirts and corslets[44]. The theme of marching soldiers is also seen on the ‘Painted Grave Stelae’ from Mycenae[45]. It is possible then to get some idea of how the equipment of a soldier would be put together and to see that warfare had a big influence on Mycenaean art. The use of boars tusk helmets is far more emphasised through art than in the archives, for example; in the fresco from Akrotiri which is dated to approximately sixteen hundred BC[46], and on a carved ivory relief from the house north of the ‘Oil Merchants’ which shows a Mycenaean warrior wearing a boars tusk helmet. These examples are significant because they represent the need to consider the Linear B tablets as just one part of the picture, and not as a sole contributor to our understanding of Mycenaean warfare. [1] Cline 2010:357 [2] Cline 2010:358 [3] Wardle 1997:45 [4] Cline 2010:367 [5] Cline 2010:367 [6] Cline 2010:367 [7] Rawlings 2007:21 [8] Wardle 1997:63 [9] Lodewijckx 1996:483 [10] Wardle 1997:64 [11] King 1970:296 [12] Wardle 1997:64 [13] Wardle 1997:73 [14] Cline 2010:367 [15] Chadwick 1958:116 [16] Rawlings 2007:23 [17] Lodewijckx 1996:493 [18] Cline 2010:367 [19] Rawlings 2007:21 [20] Wardle 1997:71 [21] Drews 1993:111 [22] Lodewijckx 1996:483 [23] Wardle 1997:73 [24] Wachsmann 1998:124 [25] Wachsmann 1998:125 [26] Cline 2010:358 [27] Wardle 1997:47 [28] Wachsmann 1998:123 [29] Chadwick 1976:169 [30] Cline 2010:358 [31] Edwards 1973:610-11 [32] Chadwick 1958:123 [33] Wardle 1997:39 [34] Wardle 1997:45 [35] Rawlings 2007:22 [36] Chadwick 1976:159 [37] Wardle 1997:73 [38] Hood 1960:9 [39] Hood 1960:10 [40] Wardle 1997:64 [41] Wardle 1997:63 [42] Rawlings 2007:23 [43] Tartaron 2013:64 [44] Suter 2008:82 [45] Suter 2008:83 [46] D’Amato 2013:41

Side Effects, Directed by Steven Soderbergh Essay -- Movie Film Analys

The film, Side Effects, is quite twisted and unnerving as it begins with the impression of the female lead, Emily Taylor, walking through pools of blood and leaving her blood stained footprints on the wood floors. Later we learn this is the murder scene. The film flashed back 3 months time. Emily was visiting her husband, Martin, who was convicted of insider trading. He was finishing his 4-year sentence and was soon to be released. Emily and her mother-in-law arrived to bring Martin home. After his release, he explains to his wife a social worker stopped by to speak with him and had given him a pamphlet on reintegrating into the community. As Martin attempted to settle back into his normal life he learned his wife had her own struggles. Martin learned Emily was severely depressed with suicidal ideation. Emily was leaving for work one morning and was driving her vehicle through the parking structure of their apartment home. She drove her vehicle into a cement wall at high speeds. She was rushed to the emergency room where it was determined this was an intentional act. She was assigned a psychiatrist, Dr. Banks. Dr. Banks learned she had dealt with depression in the past and wrote her a prescription for an anti-depressant. She pled her case to not be admitted into the psych-ward, primarily because her husband was just released from prison and does not have employment. Dr. Banks accommodates her request after she promised to take the medication as prescribed and meet with him at his office for counseling. Martin saw the suffering Emily was experiencing and told her he had a friend he met â€Å"inside† who was very intelligent and wanted to start a business when he was released. He re-assured Emily h... ...search project with Ablixa. He however, fought back in a different way than that of Emily and Dr. Siebert. Although he had to do the harder right thing, he chose to remain a conformist and refused to attain his goals through illegitimate means. As in most movies there is a happy ending and in this case the conformist wins. In the real world however, the majority of society falls into conformity and very few move out of their subculture or move up in social class. Works Cited Cole, G., & Smith, C. (2011). Criminal Justice in America. Belmont, CA, United States of America: Wadsworth Cengage Learnig. Jezak, J. a. (n.d.). David Emile Durkheim Exploration of Durkheim's "Suicide" . Retrieved March 22, 2014, from http://edurkheim.tripod.com/id19.html Siegel, L. (2011). Criminology The Core. Belmont, CA, United States of America: Wadsowrth Cengage Learning.

Living with Mental Health Disorders Essay examples -- Personality Diso

When a child acts out without a moment’s notice, what factors influence this particular action? Many adolescence are prone to live with forms of aggressive behavior. The American Academy of Child and Adolescent Psychiatry claims â€Å"teens experience and exhibit aggressive behaviors in a number of ways.† The question is why do teens act this way, in some cases aggressive behavior is biological? Sigmund Freud claims â€Å"humans [posses] an unconscious aggressive drive from birth.† In response, something causes a person to act out. â€Å"It is said that family has a large influence on a child’s aggressive behavior†¦ children who observe violent parents are likely to influence that behavior.† With this being said, a child who is surrounded by a difficult home life has a higher tendency to act rationally. Those who show aggression may have something deeper beyond the surface, known as Personality Disorders. Personality Disorders c ome in all forms, an example being Paranoid Personality Disorder. People who suffer from PPD have a hard time trusting others. People who suffer from related diseases believe that others are out to get them and they have to act before they are harmed. Living a life such as this would create a strenuous amount of weight on ones shoulders. To live one’s life in fear constantly can take a large toll on the mind. Unfortunately for the victims of mental illness, the struggle is continuous throughout their lives. What does it truly mean to be bipolar? Some people use the word freely, indicating they may have mood swings, moments of highs and lows. Typically, females claim they have symptoms of Bipolar Disorder, but in reality, the female population is just hormonal. People who suffer from â€Å"Bipolar Disorder†¦[... ...ealthcare_services/mental_health/mental_health>. National Institute of Mental Health . 27 November 2013 . Nestor, Paul G. "Mental Disorder and Violence: Personality Dimensions and Clinical Features." The American Journal of Psychiatry (2002): 1-5. Price, Rita. "School shooters typically show mental-health red flags." The Columbus Dispatch (2012): 1-2. Sohail, Dr. K. "Seven Reasons to Kill." Author, Humanist, Speaker, and Therapist (2013): 1-2. Web MD. 27 November 2013 . Web MD. 27 November 2013 . Web MD. 27 November 2013 . Web MD. 27 November 2013 .

How Did the Decision to Conduct an ROI Study Influence the Design of Coaching Program Essay

How did the decision to conduct an ROI study influence the design of coaching program. Nations Hotel Corporation is one of the reputed USA based hotel company, with an international presence in 15 countries worldwide. Hospitality industries are quiet competitive in nature and today’s success rule of hospitality includes knowledge, customer satisfaction and operational efficiency which provides pleasure of stay and departure to their guests. Any addition or subtraction in these components can increase or decrease the rating of any organization. Nations Hotel with 98% brand awareness and 72% as customer satisfaction ratio were still far from the race of preferred choice amongst the customers. Hence there, arose a need to identify the gap , so a study was conducted by the Nations hotel learning organizations (NHLO), as a result need for high leverage training program (Chapter 1-Introduction to employee training and development- High Leverage Training Program) was determined, which can improve the operational efficiency, help in retention of high performing employees and increase the level of customer satisfaction, so a structured coaching program was proposed in front of senior executives, which can have impact on business . (Chapter 1-Introduction to employee training and devlopment -ASTD Competency model, this model shows the role of training and how it will impact the business strategy). Since these strategic trainings, are expansive in nature , senior executives of Nations hotel were concerned with the calculation of Return on Investments (â€Å"Chapter -6, Training Evaluation-ROI) on coaching project, calculation of direct and indirect cost and benefits achieved through the coaching program became crucial factor in designing the program. Instead of directly going ahead with the coaching program for all employees , Nations hotel selected 25 employees randomly for the training( chapter 6-Training and evaluation-Pilot Testing, random assignment). This small selection of team was an effective decision , as identifying the strength and weakness of the coaching program brought an opportunity to make changes before ,this coaching program became available to all employees, besides this factor, another strong reason was individual coaching was a huge investment for Nations hotel, so through pilot testing evaluating the effectiveness of training and cost , and conducting need assessment was better approach to calculate the ROI for the coaching program, so that finally while evaluating the results and business impact after conducting the coaching program for the executives, Nations hotel can make a decision on further expanding this coaching program for rest of the employees. Hence the coaching program was designed in 14 steps, which comprised of the following steps. 1. Voluntary participation 2. Need for Coaching 3. Self Assessments 4. Commitment for data 5. Roles and responsibilities 6. The match 7. Orientation session 8. The engagement 9. Coaching session 10. Goal setting 11 . Action planning 12. Active learning 13. Progress review 14. Reporting. These steps helped in calculating various components of ROI which includes both the calculation of tangible and non tangible benefits, evaluation of confidence level amongst the newly trained employees, monetary value gained or lost, impact on turnover, measurement of service improvement, and last but not the least job satisfaction amongst employees after this coaching program, which will finally have impact on business. (Chapter 6-Training Evaluation-Results & Return on Investment). Question 2. Discuss the importance of getting participants committed to provide quality data. Determining the effectiveness of training program is referred as evaluation. Kirkpatrick’s four level framework measures the outcomes of an effective training program, which includes following four levels of evaluation, also there is a fifth level of evaluation, which is out of the Kirkpatrick’s framework of evaluation, and is known as Return on Investment. (Chapter 6-Training Evaluation-Kirkpatrick’s four level of framework of evaluation criteria) Level 1 Reaction: It provides feedback about the content of the program, participant’s engagement, data gathered in this level helps in improving the training program Level 2. Learning: Knowledge and skills of trainees are tested through norm referenced test, criterion referenced test or quizzes, observations and work samples, and data collected at this level, helps to judge the skill based outcomes of trainee from the training. Level 3. Application: These are also known as affective outcomes, which are measured through collection of data via interviews and attitude surveys, to measure the skill enhancements after training. Level 4. Results or Business Impact: How much training program has paid off for the company, such as improvement in customer care inclined or declined on turn around time after the training, measuring such outcomes falls, under this level, which is measured by collecting data through performance records, observation, information system Level 5. ROI: This step compares the monetary benefits to the organization with the cost of training, such as by collecting data for both tangible and intangible benefits, which includes direct and indirect cost , level of confidence , job satisfaction , cost benefit analysis etc.. Result of one level of evaluation, becomes the benchmark for the next level of evaluation, this can be best explained by the example of Nations Hotel, where careful and quality data recorded in action plan and company records by executives helped the NHLO team in making of convincing ,coaching business impact program. The ROI process in Nations Hotel, involved gathering data through out the coaching, so that evaluation result can be evaluated in all the above mentioned five levels. Since participants (executives, senior executives, coach) provided data at every level of evaluation, which helped in further clubbing of all the data, that was collected at all five levels separately, were than integrated to provide an overall evaluation of the program, and measure how effectively the program is impacting the strategic goals of the company, careful and accurate data collection at all levels helped the NHLO team to measure the result of coaching program at every step, so that any flaw at one level , can be rectified easily before moving to the next step, for example the benefit cost ratio of NHLO was 3. 21, that is it, suggests that on every dollar spend,$3. 21 was returned, but in absence of accurate data this figure would have been misleading , and could have resulted in fiasco. Not only Nations Hotel, infact most of the companies follows similar process for evaluating the levels, by collecting data at every level, and than utilizing the data for moving ahead with the next level. These data’s were further converted into monetary value, through various ways, which was further utilized in analyzing the ROI on training. In absence of quality data, training will have no impact neither for an individual in terms of cognitive, skills application, and affective outcomes nor for any organization in terms of positive business impact and ROI, which an organization aimed for. Hence quality data from the participants has a huge impact in determining the credibility, reliability and relevance of the training program ,so active participation from the trainees and providing reliable data, is essential for an effective training program (Chapter 6-Training evaluation-Outcomes used in evaluating training programs)

Maths in daily life Essay

Math and many of its aspects are a major part of everyday life. We spend the majority of our school years studying and learning the concepts of it. Many times, the question of ‘why do we need to know these things?’ has been asked. The following report will explain the history and purpose of geometry in our lives. ‘Geometry’ means ‘measure of the earth’. In ancient Egypt, the Nile would flood its banks each year, flooding the land and destroying the farm areas. When the waters receded and the people had to redefine the boundaries. This work was called geometry and was seen as a re-establishment of the principle of law and order on earth. (Lawlor, 6) Geometry is the mathematics of the properties, measurement, and relationship of the points, lines, angles, surfaces, and solids (Foner and Garraty). An ancient Greek mathematician, named Euclidean, was the founder of the study of geometry. Euclid’s Elements is the basis for modern school textbooks in geometry. On the other hand, there is non-Euclidean geometry. This refers to the types of geometry which deny Euclid’s postulate about parallel lines. Once Albert Einstein put forth the theory of Relativity other approaches to geometry, besides Euclid’s wa Math and many of its aspects are a major part of everyday life. We spend the majority of our school years studying and learning the concepts of it. Many times, the question of ‘why do we need to know these things?’ has been asked. The following report will explain the history and purpose of geometry in our lives. ‘Geometry’ means ‘measure of the earth’. In ancient Egypt, the Nile would flood its banks each year, flooding the land and destroying the farm areas. When the waters receded and the people had to redefine the boundaries. This work was called geometry and was seen as a re-establishment of the principle of law and order on earth. (Lawlor, 6) Geometry is the mathematics of the properties, measurement, and relationship of the points, l ines, angles, surfaces, and solids (Foner and Garraty). An ancient Greek mathematician, named Euclidean, was the founder of the study of geometry. Euclid’s Elements is the basis for modern school textbooks in geometry. On the other hand, there is non-Euclidean geometry. This refers to the types of geometry which deny Euclid’s postulate about parallel lines. Once Albert Einstein put forth the theory of Relativity other approaches to geometry, besides Euclid’s wa Math and many of its aspects are a major part of everyday life. We spend the majority of our school years studying and learning the concepts of it. Many times, the  question of ‘why do we need to know these things?’ has been asked. The following report will explain the history and purpose of geometry in our lives. ‘Geometry’ means ‘measure of the earth’. In ancient Egypt, the Nile would flood its banks each year, flooding the land and destroying the farm areas. When the waters receded and the people had to redefine the boundaries. This work was called geometry and was seen as a re-establishment of the principle of law and order on earth. (Lawlor, 6) Geometry is the mathematics of the properties, measurement, and relationship of the points, lines, angles, surfaces, and solids (Foner and Garraty). An ancient Greek mathematician, named Euclidean, was the founder of the study of geometry. Euclid’s Elements is the basis for modern school textbooks in geometry. On the other hand, there is non-Euclidean geometry. This refers to the types of geometry which deny Euclid’s postulate about parallel lines. Once Albert Einstein put forth the theory of Relativity other approaches to geometry, besides Euclid’s wa Math and many of its aspects are a major part of everyday life. We spend the majority of our school years studying and learning the concepts of it. Many times, the question of ‘why do we need to know these things?’ has been asked. The following report will explain the history and purpose of geometry in our lives. ‘Geometry’ means ‘measure of the earth’. In ancient Egypt, the Nile would flood its banks each year, flooding the land and destroying the farm areas. When the waters receded and the people had to redefine the boundaries. This work was called geometry and was seen as a re-establishment of the principle of law and order on earth. (Lawlor, 6) Geometry is the mathematics of the properties, measurement, and relationship of the points, lines, angles, surfaces, and solids (Foner and Garraty). An ancient Greek mathematician, named Euclidean, was the founder of the study of geometry. Euclid’s Elements is the basis for modern school textbooks in geometry. On the other hand, there is non-Euclidean geometry. This refers to the types of geometry which deny Euclid’s postulate about parallel lines. Once Albert Einstein put forth the theory of Relativity other approaches to geometry, besides Euclid’s wa Math and many of its aspects are a major part of everyday life. We spend the majority of our school years studying and learning the concepts of it. Many times, the question of ‘why do we need to know these things?â€℠¢ has been asked. The following report will explain the history and purpose of geometry in our  lives. ‘Geometry’ means ‘measure of the earth’. In ancient Egypt, the Nile would flood its banks each year, flooding the land and destroying the farm areas. When the waters receded and the people had to redefine the boundaries. This work was called geometry and was seen as a re-establishment of the principle of law and order on earth. (Lawlor, 6) Geometry is the mathematics of the properties, measurement, and relationship of the points, lines, angles, surfaces, and solids (Foner and Garraty). An ancient Greek mathematician, named Euclidean, was the founder of the study of geometry. Euclid’s Elements is the basis for modern school textbooks in geometry. On the other hand, there is non-Euclidean geometry. This refers to the types of geometry which deny Euclid’s postulate about parallel lines. Once Albert Einstein put forth the theory of Relativity other approaches to geometry, besides Euclid’s wa Math and many of its aspects are a major part of everyday life. We spend the majority of our school years studying and learning the concepts of it. Many times, the question of ‘why do we need to know these things?’ has been asked. The following report will explain the history and purpose of geometry in our lives. ‘Geometry’ means ‘measure of the earth’. In ancient Egypt, the Nile would flood its banks each year, flooding the land and destroying the farm areas. When the waters receded and the people had to redefine the boundaries. This work was called geometry and was seen as a re-establishment of the principle of law and order on earth. (Lawlor, 6) Geometry is the mathematics of the properties, measurement, and relationship of the points, lines, angles, surfaces, and solids (Foner and Garraty). An ancient Greek mathematician, named Euclidean, was the founder of the study of geometry. Euclid’s Elements is the basis for modern school textbooks in geometry. On the other hand, there is non-Euclidean geometry. This refers to the types of geometry which deny Euclid’s postulate about parallel lines. Once Albert Einstein put forth the theory of Relativity other approaches to geometry, besides Euclid’s wa Math and many of its aspects are a major part of everyday life. We spend the majority of our school years studying and learning the concepts of it. Many times, the question of ‘why do we need to know these things?’ has been asked. The following report will explain the history and purpose of geometry in our lives. ‘Geometry’ means ‘measure of the earth’. In ancient Egypt, the Nile would flood its banks each year, flooding the land and destroying the farm  areas. When the waters receded and the people had to redefine the boundaries. This work was called geometry and was seen as a re-establishment of the principle of law and order on earth. (Lawlor, 6) Geometry is the mathematics of the properties, measurement, and relationship of the points, lines, angles, surfaces, and solids (Foner and Garraty). An ancient Greek mathematician, named Euclidean, was the founder of the study of geometry. Euclid’s Elements is the basis for modern school textbooks in geometry. On the other hand, there is non-Euclidean geometry. This refers to the types of geometry which deny Euclid’s postulate about parallel lines. Once Albert Einstein put forth the theory of Relativity other approaches to geometry, besides Euclid’s wa Math and many of its aspects are a major part of everyday life. We spend the majority of our school years studying and learning the concepts of it. Many times, the question of ‘why do we need to know these things?’ has been asked. The following report will explain the history and purpose of geometry in our lives. ‘Geometry’ means ‘measure of the earth’. In ancient Egypt, the Nile would flood its banks each year, flooding the land and destroying the farm areas. When the waters receded and the people had to redefine the boundaries. This work was called geometry and was seen as a re-establishment of the principle of law and order on earth. (Lawlor, 6) Geometry is the mathematics of the properties, measurement, and relationship of the points, lines, angles, surfaces, and solids (Foner and Garraty). An ancient Greek mathematician, named Euclidean, was the founder of the study of geometry. Euclid’s Elements is the basis for modern school textbooks in geometry. On the other hand, there is non-Euclidean geometry. This refers to the types of geometry which deny Euclid’s postulate about parallel lines. Once Albert Einstein put forth the theory of Relativity other approaches to geometry, besides Euclid’s wa Math and many of its aspects are a major part of everyday life. We spend the majority of our school years studying and learning the concepts of it. Many times, the question of ‘why do we need to know these things?’ has been asked. The following report will explain the history and purpose of geometry in our lives. ‘Geometry’ means ‘measure of the earth’. In ancient Egypt, the Nile would flood its banks each year, flooding the land and destroying the farm areas. When the waters receded and the people had to redefine the boundaries. This work was called geometry and was seen as a re-establishment  of the principle of law and order on earth. (Lawlor, 6) Geometry is the mathematics of the properties, measurement, and relationship of the points, lines, angles, surfaces, and solids (Foner and Garraty). An ancient Greek mathematician, named Euclidean, was the founder of the study of geometry. Euclid’s Elements is the basis for modern school textbooks in geometry. On the other hand, there is non-Euclidean geometry. This refers to the types of geometry which deny Euclid’s postulate about parallel lines.