TABLE OF CONTENTS

DECLARATION………………………………………………………………………………………………….. i

ACKNOWLEDGMENT………………………………………………………………………………………. ii

EXECUTIVE SUMMARY………………………………………………………………………………….. iii

CHAPTER 1: INTRODUCTION…………………………………………………………………………… 1

• Purpose of the Project…………………………………………………………………………………… 1
  • Scope of the Project……………………………………………………………………………………… 1
  • Profile of BanqMoni Limited………………………………………………………………………… 1
  • Rationale for Selecting BanqMoni Limited……………………………………………………… 3
  • Internal Context Analysis……………………………………………………………………………… 4

Strengths………………………………………………………………………………………………………. 5

Weaknesses…………………………………………………………………………………………………… 6

Opportunities…………………………………………………………………………………………………. 6

Threats………………………………………………………………………………………………………….. 7

• Overview of the External Environment…………………………………………………………… 9
  • Political Factors……………………………………………………………………………………… 9
  • Economic Factors…………………………………………………………………………………. 10
  • Socio-cultural Factors……………………………………………………………………………. 11
  • Technological Factors……………………………………………………………………………. 11
  • Legal Factors……………………………………………………………………………………….. 12
  • Ecological Factors………………………………………………………………………………… 13
  • Ghana’s Financial Technology Industry………………………………………………………… 13
  • Competitive Analysis………………………………………………………………………………….. 14
    • The threat of New Entrants……………………………………………………………………. 15
    • Bargaining Power of Suppliers……………………………………………………………….. 15
    • Bargaining Power of Buyers………………………………………………………………….. 16
    • The Threat from Substitute Products………………………………………………………. 16
    • Rivalry among the existing players…………………………………………………………. 16

CHAPTER 2: NEEDS ASSESSMENT…………………………………………………………………. 18

• Chapter Overview………………………………………………………………………………………. 18
  • Needs Assessment……………………………………………………………………………………… 18
  • Methodology……………………………………………………………………………………………… 18
  • Problem Statement………………………………………………………………………………….. 20
  • Key Findings………………………………………………………………………………………….. 20

CHAPTER 3: MASTERY OF SUBJECT MATTER………………………………………………. 25

• Chapter Overview………………………………………………………………………………………. 25
  • Working Capital Management……………………………………………………………………… 25
  • Motives for Holding Cash…………………………………………………………………………… 25
  • Cash Management………………………………………………………………………………………. 27
  • The Optimal Level of Cash Balance……………………………………………………………… 27
  • Models of Cash Management………………………………………………………………………. 28
    • The Baumol Model:………………………………………………………………………………. 28
    • The Miller-Orr Model:…………………………………………………………………………… 29
  • Investment of Surplus Funds……………………………………………………………………….. 30
  • Investment Policy………………………………………………………………………………………. 32
  • Case Study………………………………………………………………………………………………… 33
  • Conclusion from Literature Review………………………………………………………………. 34

CHAPTER 4: SOLUTION AND IMPLEMENTATION PLAN……………………………… 35

4.0 Chapter Overview………………………………………………………………………………………. 35

• Solution and Tool……………………………………………………………………………………….. 37
  • Cash Management Framework using the Miller-Orr Model……………………….. 37
  • Investment Analysis Tool………………………………………………………………………. 39
  • Investment Policy for BanqMoni Limited……………………………………………….. 42
  • Implementation Plan…………………………………………………………………………………… 47
  • Resources Needed……………………………………………………………………………………… 48
  • Solution Analysis……………………………………………………………………………………….. 49

CHAPTER 5: RECOMMENDATIONS AND CONCLUSIONS……………………………. 50

• Chapter Overview………………………………………………………………………………………. 50
  • Recommendations………………………………………………………………………………………. 50
  • Project Limitation………………………………………………………………………………………. 51
  • Conclusion………………………………………………………………………………………………… 51

BIBLIOGRAPHY……………………………………………………………………………………………… 53

APPENDICES…………………………………………………………………………………………………… 59

List of Tables………………………………………………………………………………………………….. 59

List of Figures…………………………………………………………………………………………………. 61

CHAPTER 1: INTRODUCTION

            Purpose of the Project

This applied research project seeks to develop a cash management and investment analysis framework for BanqMoni Limited. The tool will assist the firm in determining its optimal cash balance, as well as when and how much the firm must invest or redeem, to reach the optimal level.

An investment policy statement will also be documented for the firm. The policy will detail strategies for prudent investment of the firm’s surplus funds while maximizing the efficiency of the firm’s cash management activities. The policy is intended to be specific and meaningful for the firm, yet flexible for future use.

            Scope of the Project

There are five sections in this report. The introductory chapter gives a profile of BanqMoni Ltd. and an evaluation of the company’s strengths, weaknesses, opportunities, and threats (SWOT). The chapter also explores the macroenvironment and microenvironment in which the firm operates. Chapter two looks at assessing the operations of BanqMoni Ltd to identify a business gap and propose solutions. To fill that gap, chapter three reviews existing literature to understand the problem identified and ascertain the viability of the proposed solutions. Chapter four primarily looks at the designed solution or tool, as well as the plan for implementation. The final section looks at limitations, conclusions, and recommendations drawn from the project.

            Profile of BanqMoni Limited

BanqMoni is a financial technology (FinTech) service provider, fully registered under the laws of Ghana as a limited liability company. BanqMoni was launched in

August 2017. Its goal is to support banks in their efforts to build a thriving and cash-lite economy. The firm seeks to achieve this through its insurance-backed platform in partnership with GT Bank, which enables anyone to deposit money into any bank account within Ghana at any time by visiting any mobile money agent or from their mobile money wallet.

The firm wishes to leverage the growth of mobile money services among Ghanaians to help achieve financial inclusion. The vision of the startup is to innovate the banking and payment sector, to enhance financial inclusion through its simple mobile solutions. Thus, its mission is to make banking convenient and easy for Ghanaians, through its platform that frees depositors from the hassle of visiting bank branches.

BanqMoni exudes three core values: world class, integrity, and reliability. Their service and employees deliver world-class standards in every aspect of the business. They also ensure honesty in all their dealings, as they uphold ethical standards in all their operations. The firm’s clients, partners, and employees can rely on them, as their empathetic strength enables them to provide and support their stakeholders throughout any process.

Beyond instant bank deposits, BanqMoni seeks to pioneer innovative solutions in the money transfer and payment space. These innovations include building an electronic cheque solution that eliminates the use of paper cheques for withdrawals and ensures that the environment is protected by reducing the printing of chequebooks.

            Rationale for Selecting BanqMoni Limited

The role of BanqMoni Ltd in the society cannot be overlooked. As a player in the FinTech industry, its services are core to transforming the traditional mode of banking into a modern and digitized one. Partnership with GT Bank ensures that funds deposited using the platform reflect in the bank account within few hours of deposits, hence doing away with delays in crediting of funds to accounts.

Unfortunately, in an interview with the firm, it was gathered that because of funds provided by shareholders to cover operational expenses, the firm saves its revenue made on its platform in a zero-interest current account, which attracts bank charges. This decision orchestrated by the Board of Directors is an opportunity cost to the firm as they are holding idle cash, which could be better invested to generate profit for the company. Besides, this decision may also increase overall risk by damaging business value and making management excessively confident (Lee & Powell, 2011).

According to the Miller-Orr model of cash management, firms need to find out their optimal level of cash balance to manage tradeoffs between opportunity cost of holding cash and trading cost of selling and buying marketable securities (Stone, 1972). The firm’s productive edge may be eroded by holding surplus cash balance (Lee & Powell, 2011). The firm also faces an inflation risk as its purchasing power decreases year after year as inflation rates increases. These challenges can impede the ability of the firm to continually be in business (Oler & Picconi, 2013).

Considering that BanqMoni Ltd does not have an optimal cash level highlights the need for this project to ensure efficient deployment of idle funds by investing surplus cash in short-term securities. Hence, cash management and investment analysis tool,

which will enable the firm to determine its optimal cash balance and invest surplus cash profitably will be designed in Excel. Successful completion of the project will ensure that available funds at BanqMoni are managed and invested in a productive manner while improving profitability and maximizing shareholders’ wealth.

            Internal Context Analysis

This subsection provides a SWOT analysis of the firm. It is a simple tool that provides insights on the strengths, weaknesses, opportunities, and threats of an organization (Downey, 2007). It defines the goals of the firm and identifies the internal and external factors that are central to achieving that goal. Data for this analysis was gathered from interactions with employees of BanqMoni Ltd and a review of the industry.

Strengths	Weaknesses
Great Organizational cultureExpertise in software developmentLower rates than competitorsSimple and convenient serviceReliable operational funds	Little market presence and brand reputationA small staff with little work experienceIdle cashLoose recruitment procedures
Opportunities	Threats
Government support for a cashless economyTax incentives for private sector businessesGrowing savings and investment culture among GhanaiansIncreasing demand for FinTech services	Mobile money fraudUnstable mobile networksSystem breakdowns from partner financial institutionsTechnological advancement and imitability among industry players

Strengths

• Organizational culture: The working atmosphere is one of a conducive kind that allows the employees to feel like a part of the firm. Since BanqMoni is a startup with small staff strength, the firm represents the shared values and principles of each employee. The directors also ensure that employees voice out their concerns through their weekly progress reports, which enable the executives to understand what is happening on the grounds.

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