THE EFFECTS OF MODERN TECHNOLOGY ON THE LEVEL OF EMPLOYMENT OPPORTUNITIES IN FINANCIAL INSTITUTIONS: A CASE STUDY OF EQUITY BANK (EQTY) KATWE BRANCHMAKINDYE DIVISION­ KAMPALA DISTRICT

BY

MAGEMBE IVAN BEC/10003/81/DU

A RESEARCH PROPOSAL SUBMITTED TO THE DEPARTMENT OF ECONOMICS AND APPLIED STATISTICS IN PARTIAL FULFILMENT FOR THE A WARD OF BACHELORS DEGREE IN ARTS IN ECONOMICS OF KAMPALA INTERNATIONAL UNIVERSITY

AUGUST2011 DECLARATION

I Magembe Ivan, declare that the research is my original work and has never been submitted to any other University for a similar or any other degree award. Accept the references used of which I have dully acknowledged.

Signature .. ~························

<'") nd ~ ..\-- ;>._. Date. ~ ..... /:~V'u-V..:.!-...... m .J . . T

APPROVAL

This is to confirm that this work has been under my supervision and guidance. It is ready for Submission and Examination as a University Supervisor.

Signature. ~~ ········· · ··

Name : Ms. Nakawungu Faridah

Date , ~)~\!.~ .. ~\

11 TABLE OF CONTENTS Declaration ...... i Approval ...... ii Dedication ...... iii Acknowledgement ...... iv List of accronyms ...... v Table of contents ...... iv List of tables ...... vii Abstract ...... viii

CHAPTER ONE ...... 1 1.0 Introduction ...... 1 1.1 Historical Perspective ...... 1 1.2 Statement of the Problem ...... 2 1.3 Conceptual Perspective ...... 2 1.4 Purpose of the Study ...... 3 1.5 Objectives OfThe Study ...... 3 1.6 Research Questions ...... 3 1.7 Scope ...... 3 1.8 Significancy of the Study ...... 4

CHAPTER TWO:LITERATURE REVIEW ...... 5 2.0 Introduction ...... 5 2.1 Conceptual framework ...... 5 2.2 Effects of modern technology on the level of employment in financial institutions ...... 6 2.3 Challenges facing modern technology in financial institutions in relation to the level of employment opportunities ...... 8 2.4 Possible solutions to the challenges facing modern technology in financial institutions in relation to the level of employment opportunities ...... 11

IV CHAPTER THREE:METHODOLOGY ...... 15 3.1 Introduction ...... 15 3.2 Research design ...... 15 3.3 Unit of inquiry ...... 15 3.3 1 Study population ...... Error! Bookmark not defined.15 3.4 Sampling procedure and sample size ...... 15 3.5 Data Collection Methods and instruments ...... 16 3.5.1 Primmy Data source ...... 16 3.5.1.1. Interview guide ...... 16 3.5.1.2 Observation ...... 16 3.5.1.3 Questionnaire ...... !? 3.5.2 Secondary source ...... 17 3.5.2.1 Documentation ...... 17 3.6 Data analysis and interpretation ...... 17 3. 7 Validity of instruments ...... 18 3.8 Reliability of the instruments ...... 18 3.9 Ethical consideration ...... 18

CHAPTER FOUR:DATA PRESENTATION, INTERPRETATION AND ANALYSIS ...... 19 OFTHEFINDINGS ...... l9 4.0 Introduction ...... 19 4.1 Social demo graphical characteristics of respondents ...... 19 4.2 The effects of modern technology on the level of employment in financial institutions ..... 22 4.3 Challenges facing modern technology in financial institutions in relation to the level of employment opportunities ...... 25 4.4 Possible solutions to the challenges facing modern teclmology in financial institutions ...... 30

v CHAPTER FIVE:DISCUSSION, CONCLUSSIONS AND RECOMMENDATIONS ...... 34 5.0 Introduction ...... 34 5.1 Discussion ...... 34 5.2 Conclusion ...... 35 5.3 Recommendations ...... 36 REFERENCES ...... 38 Appendix I : Questionnaires ...... 40 Appendix II:The interview Guide ...... 48 Appendix III:Research Budget ...... 49 Appendix IV: Time Framework ...... 50 INTRODUCTION LETTER ...... 51

VI LIST OF TABLES

Table 1: Showing sample size for respondents ...... 20 Table 2: Social demographic characteristics of the respondents ...... 24 Table 3: The effects of modern teclmology on the level of employment in financial institutions.

······················································································································································· 27 Table 4: Challenges facing modern technology in financial institutions in relation to the level in employment...... 29 Table 5: Possible solutions to the challenges faced by modern technology in financial institutions ...... 34

Vll ABSTRACT The Study was meant to investigate the effects of modem technology on the level of employment in financial institutions. The study was guided by the following Objectives; to find out the effects of modern technology on the level of employment opportunities in financial institutions, to find out the challenges facing modem technology in financial institutions in relation to employment opportunities, and to find out possible solutions to the challenges faced by modern technology in financial institutions.

The study employed the cross-section design in which both the quantitative and qualitative techniques were used. Stratified and simple random sampling methods were used to locate 35 respondents that were considered during the study. Questionnaires were used to generate information from the respondents.

The study findings revealed that modern technology leads to massive displacement of workers in financial institutions, it was also revealed that as modern technology changes, it causes a feeling of insecurity at work, indivisibilities at work, and that it makes jobs obscenest. However, on the other hand it was also revealed that modern technology reduces the level of illiteracy in financial institutions and makes people compete for more advanced technology jobs. Challenges facing modem technology in financial institutions in relation to employment opportunities and possible solutions were established.

Conclusively, it was found out that through liberalization of the economy and privatization of government owned financial institutions, facilitation of exchange of foreign currencies, getting involved in management of some schools by financial institutions, use of later adopter opportunities, putting up a law that accommodates electronic contracts and signatures and reduction in taxes by the govemment, financial institutions can be in position to create more employment opp01tunities for more people in financial institutions as demanded by the uncontrolled speed at which modern technology is moving.

It is therefore recommended by the researcher that privatization, reduction or total removal of taxes on modern on modern technology adoption methods and getting involved in management of some schools or institutes by financial institutions can pave the way for modem

V111 CHAPTER ONE

1.0 Introduction This chapter deals with the background of the study both historical and conceptual perspective, statement of the problem, purpose, objectives, research questions, scope and significance of the study.

1.1 Historical Perspective In society there have been very many changes since the first century to the present twenty first century changes in almost every aspect of our lives. One of the changes is the industrial revolution. This has greatly affected people's lives.

The rate of technological growth is high implying that little man power and enough skill is needed. Technology thus throws out people who have been previously employed and less skilled and reduces the amount oftime spent on the would be boring and repetitive tasks.

In the industries and many other organizations the trend of automation can be seen clearly. An improvement in the level of technology means that more output can be produced with fewer resources and less costs for example the use of computers has made the newspaper factories and processing of cheques by banks produce at lower costs.

Although technology is blamed for job losses, Tony Mallier and Tony Shafts instead believes that it creates more jobs. They say effects of technical change are not always one way. Cash dispensers for example reduced the demand for banlc cashiers and clerical staff in the short run but by making bank services more useful and accessible to the public, they have encouraged wide acceptance of payment of wages through bank accounts and this in the long term, they have contributed to the expansion of the banking and financial sector and helped to expand employment in that sector.

1 This citation shows that technology also leads to employment in the long run. Equity Bank (Uganda) was created in 2008 when the Equity Bank Group purchased Uganda Microfinance Limited, a Tier II, Ugandan Microfinance Company for an all-share price valued at US$27 million. Equity Bank (Uganda) launched under its new brand on March 30, 2009. As of August 20 l 0, Equity Bank had a customer base in Uganda of approximately 440,000. Equity Bank (Uganda) is a member of the Equity Bank Group. As of June 2010, the Group's asset base exceeded US$1.5 billion, with shareholders' equity in excess ofUS$237 million. The stock of the Equity Bank Group is listed on the Nairobi Stock Exchange, where it trades under the symbol EQTY. It is also cross-listed on the Uganda Securities Exchange under the symbol: EBL.

1.2 Statement of the Problem Financial institutions have been established in almost all parts of the country and their main objective is to extend credit facilities to the public and to create employment opportunities. These financial institutions focus on improving households' income by providing first class financial services to the public. However it has been realized that modern technology has an effect on the level of employment in these financial institutions despite the fact that they have tried to improve on the level of employment in the society. If this problem is not solved, it is more likely to affect the govemment and the public at large. This has prompted the researcher to investigate on the effects of modern technology on the level of employment in financial institutions. In this context, Equity Bank will be taken into consideration

1.3 Conceptual Perspective According to Christine Lauransdatter, (1920-1922) unemployment is a state where one wants to work but doesn't have a job. She further said that the term doesn't refer to people who are not seeking to work because of age, illness or mental and physical handicap, nor does it refer to people attending school or keeping house. Such people are classified as out of labor force rather than unemployed (The world book Encyclopedia, 1978 Edition)

According to (Richard Hird 2005 Working with Economics, a Canadian framework), Unemployment rate is the percentage of labor force that is not working but looking for work and

2 the unemployed are those who were without work but actively looked for work in the last four weeks.

1.4 Purpose of the Study The purpose of the study is to find the effects of modern technology on the level of employment in financial institutions.

1.5 Objectives Of The Study (i) To find out the effects of modern technology on the level of employment opportunities in financial institutions.

(ii) To find out the challenges facing modern technology in financial institutions in relation to the level of employment opportunities.

(iii) To find out the possible solutions to overcome the challenges of modern technology in the financial institutions.

1.6 Research Questions (i) What are the effects of modern technology to the level of employment oppmiunities m financial institutions?

(ii) What are the challenges faced by modern technology in financial institutions?

(iii) What are the possible solutions to the challenges faced by modern technology in financial institutions?

1.7 Scope The study took place in Kampala central, Katwe road where respondents from Equity bank were visited. Also other people around this place with small business and those completely without employment were consulted. The study was mainly concerned with the effects of modern

3 technology on the level of employment in financial institutions. Data fi·om Janmuy 2009 to May 20 II was used.

1.8 Significancy ofthe Study The financial institutions will come out with a clear policy on whether to consider adoption of modern technology or not.

Laborers or employees will be equipped with choice on how to deal with modern technology depending on the impact it has had on the level of employment.

The research findings are hoped to enable governments to come with a choice on whether to include computer training on their programs for schools.

It is hoped to enable cuniculum implementers to lay strategies on how to improve their cuniculum whether there is need for redesigning programs or not.

The findings will act as an eye opener m guiding govenunent on how to adopt modem technology for its citizens. It will enable government organize refi·eshers courses, whether or not to organize seminars or retraining for its citizens to enable them have job security.

4 CHAPTER TWO LITERATURE REVIEW

2.0 Introduction In this chapter, the researcher will focus on what several writers have recorded about modem technology and its effects on the level of employment opportunities in financial institutions and as well develop of conceptual framework busing on the objectives. It generally looks of the automation and its impaction on many financial institutions.

2.1 Conceptual framework Modern Technology Modern Technology

Effects of modern technology on Employment in financial institutions EMPLOYMENT ~ I I Displacement of workers Indivisibilities Technical constraints Insecurity Fluctuations in the business cycles

Challenges faced by modern technology Possible Solutions to challenges in financial institutions Putting up a law that accommodates electronic contracts and signatures Government Intervention ~ On job training Low levels of internet penetration Branch banking Massive sensitization Lack of suitable legal and regulatory framework Convergence Facilitation of currency movement Developments in microfinance institutions Exempting taxes on computers High administrative costs Management of some schools Late adopter opportunities High illiteracy rate liberalization and privatization High cost oflnternet

5 2.2 Effects of modern technology on the level of employment in financial institutions. According to Peter S.Rose, technology is revolutionizing every field of human endeavor and activity. One of them is introduction of information technology into capital market. The intemet banking is changing the banking industry and is having the major effects on banking relationship. Web is more important for retail financial services than for many other industries. Predictions that automation would lead to mass unemployment and displacement of workers have persisted for many years, as early as the Great Depression in the twentieth century and resurfacing in the mid-1950s to early-1960s, when a combination of relatively high unemployment and new production technologies led many to argue that a causal connection existed between the two. These concerns reemerged in the initial years of the recovery from the recession of the early 1990s when the relatively slow decline in unemployment prompted fears of a "jobless recovery" or even the "end of work." (Michael J. Handel a Consultant to SRI International (2003)

Marion R. Daugherty states: advances in technology continuously call for new skills and make older skills absolute while laboratory teclmicians, engineers, computer programs, doctors and research workers are badly needed; thousands of people who lack these skills are out of work. The same applies when it comes to financial institutions, the more technology develops, the more skilled people are needed in the financial institutions and those who lack skills end up being swept out or lowered in their positions at work. It is highly agreed that people in Africa lack appropriate resources to cope up with the speed at which modern technology is moving.

In support of the above Jioner Charles W Jr (1987) states: sometimes teclmology makes jobs obsolete. I faced this problem in a large distribution organization. Here we made greater use of computers, eliminated lower skilled jobs and created new jobs that demanded greater skills. In this case retaining is often required to help employees qualify for new assignments.

Modem technology often causes a feeling of insecurity for example Zhorne (1988:45) comments that managers feel threatened by employees who are suddenly empowered by the ability to use and analyze data on their computers. He says: some managers feel threatened that the computer is robbing their power and their strong position which enables them to make decisions about

6 employees. Another example would be workers fearing the introduction of computers in the organizations. A case study in Japan by international Women and new technology in work places replaced women workers with machines.

In practice, a given level of technology may lead to what are termed "indivisibilities" as observed by Tony Mallier (1989:72); that when a pa1ticular piece or set of machinery is acquired, it IS possible that this can be operated by a team of workers. Technical constraints of this kind therefore may cause the firms and sometimes industries demand for labor to rises swifts as certain levels of out put are reached. Decrease in product demand can lead to decline in demand for labor. When this happens a production line is likely to be abandoned, several hundred workers may loose their jobs over a sh01t period. The pace of development in computer technology has been awesome and breathtaking, writes TG Rowan (1982). In an incredibly sh01t period of time the computer has developed from some research aid to a vital tool for management and business, nothing about current trends suggests that the pace will slacken and all the signs that the original tended general purpose computing capability supplanted by the attraction to dedicated single purpose function oriented computers.

Although modern technology is generally thought of as a cause of unemployment but Koontz Harold !998 writes few of the benefits which are of greater variety of products but has associated problems like traffic jaJ.n, pollution of the water and air , energy sh01tages and most of all loss of jobs to the formerly employed. Some analysts think that fmther expansion of demand brings the economy to full employment. These analysts were the classical economists and neo-classical economists in the 18th and 19th centmies. While there is unemployment at the same time job vacancies remain unfilled. This is due to failure of matching the jobless to job openings.

According to Michael J. Handel a Consultant to SRI International (2003), Although certain populations and jobs in certain industries may be disproportionately affected by technological change, in retrospect, most believers in technology-induced mass unemployment seem to have mistaken fluctuations in the business cycle for more fundamental transformations of the workplace and labor market. Although periods of high unemployment are painful, they have reflected mostly oscillations in general business activity rather than the effects of abmpt

7 technological change. When macroeconomic conditions have improved, unemployment has declined. Despite the unprecedented diffusion of information technology since 1980, employment in the late 1990s was better than at any time in the previous 3 0 years.

2.3 Challenges facing modern technology in financial institutions in relation to the level of employment opportunities Banking in Uganda faces numerous challenges to fully adopt and adapt E-Banking applications and seize the oppmtunities presented by ICT applications in general. Key Challenges for E­ Banking applications are: Low level of internet penetration and poorly developed telecommunication infrastructure: Lack of appropriate infrastructure for telecommunications, internet and online payments impede smooth development and improvements in e-commerce and e-banking in Uganda. Most mral areas of the country, where the majority of small and medium businesses are concentrated, have no internet facilities and thus are unable to engage in e-commerce activities. This reduces the chances of the very few expe1is in the relevant technology in getting employed in the financial institutions. However in some towns in Uganda, e-banking, mobile money and SMS, the internet and mobile phone have changed banking in a way that makes the ATM (automated teller machine) -· pretty sophisticated a few years ago - seem ancient today. With growth of internet usage, almost every bank now provides e-banking. Within a year, telecommunication companies have signed up almost 2,000,000 mobile money account holders, most of whom are outside the reach of banks. Compared to the combined base of 5.5 million banlc account holders, telephone companies may soon have more financial customers than banks. The challenge is how to extend these services to the remote areas.(The Executive Director of the Uganda Bankers' Association, Emmanuel Turyamuhika Kikoni).

Lack of suitable legal and regulatory framework for e-commerce and e-payment: Ugandan cunent laws do not accommodate electronic contracts and signatures. Uganda has not yet enacted legislation that deals with e-commerce concerns including enforceability of the validity of electronic contracts, digital signatures and intellectual copyright and restrict the use of encryption technologies. This reduces the operation of modern technology in performing its functions towards employment oppmitmities in financial institutions. (Yayehyirad Kitaw, 2006).

8 High rates of illiteracy: Low literacy rate is a serious impediment for the adoption of E-Banking in Uganda as it hinders the accessibility of banking services. For citizens to fully enjoy the benefits of E-Banking, they should not only know how to read and write but also possess basic ICT literacy. This reduces the rate at which modern technology penetrates financial institutions.

High cost of Internet: The Internet is the driving force for the growth of modern technology. The cost of Internet access relative to per capita income is a critical factor. Compared to the developed countries, there are higher costs of entry into the e-commerce market in Uganda. These include high start-up investment costs, high costs of computers and telecommunication and licensing requirements. This also limits the rate at which modern technology penetrates Financial institutions and hence reduces the availability of such jobs in the financial institutions.(Magembe, B A S and Shemi A P 2002)

Absence of financial networks that link different banks (Banks are not yet automated): Most of the banking-transactions currently taking place use credit and debit cards supplied by Visa and MasterCard. For conducting e-banking, the use of credit or debit cards is manrlatory thus requiring the need for specialized systems which are not cunently available. This leaves the space for more expertise personnel to fill that employment gap.

According to Mathias Katamba, High administrative costs are one of the challenges faced by financial institutions. Microfinance Institutions are accused of having high interest rates especially since their rural clients are poor. The costs of administering small loans to the rural population are extremely high especially when it comes to the loan monitoring using modern technology. Supervision also becomes very costly especially when the loan becomes ·very costly as the institution strives to keep the gold loan quality portfolio. If such costs are added with the costs of implementing modern technology, it becomes hard to execute their businesses. This limits the rate of operation of modern technology.

According to Lawrence D. (2010), Modern technology leads to increased competition that may imply lower prices for financial services. In addition electronic banking facilities are very

9 expensive to establish. These expenses plus lower prices would appear to imply lower profits for financial institutions. However the cost per financial transaction is expected to drop dramatically as the volume of electronically processed transactions increase. It is so much cheaper to install an automatic Teller Machine than a new branch. This makes modern technology challenged in a way that it is still failing to find proper means of functioning while creating more jobs for the public.

Frequent power interruption: Lack of reliable power supply is a key challenge for smoothly running e-banking in Uganda. Although methods like use of generators have been employed, there is need for more automated generators (standby generators) that can keep the systems running all the time for proper utilization of modern technology. This is also followed by the high costs of oil products like Petrol to run those generators. This limits the chances of seeing the fi·uits of modern technology. (Magembe, BAS and Shemi A P 2002)

Cyber security Issues: Cyber security is a global challenge that requires global and multi­ dimensional response with respect to policy, socio-economic, legal and technological aspects. E-banking applications represent a security challenge as they highly depend on critical ICT systems that create vulnerabilities in financial institutions, businesses and potentially harm banking customers. It is imperative for banks to understand and address security concerns in order to leverage the potentials of ICTs in delivering E-banking applications. In the deployment of E-banking application, attention should be drawn to the prevention of cyber crime (i.e. the use ofiCTs by individuals to commit fi·aud and other crimes against banking transactions) Lawrence D. (2010)

As Walter (2004) observes, financial institutions failures are often more difficult to resolve them, the failures of other business and typically some form of government obligation over the failure process in order to avoid misallocation of resources and the technology in third world countries is not enough to monitor resource allocation to the last point, financial institutions still reserve some people to monitor resources allocation. This leaves the need for more workers although modern technology exists.

10 Government intervention: After implementation of financial sector reforms in the early 1990's which among others abolished directed credit to priority sectors (Muwanga 2000) the government put in place some credit programmes such as Entandikwa and the Youth Entrepreneurship (YES) credit schemes which were founded through the treasury. These limit the extent to which these financial institutions carry out their role of extending credit facilities to the public using modem technology. It's this money that people who cant access modem technology to be employed in these financial institutions use to create their own jobs.

2.4 Possible solutions to the challenges facing modern technology in financial institutions in relation to the level of employment opportunities. John Ke1medy put it well in the 1960s that if men have the talent to invent new machines that put men off work, they also have the talent to put those men back to work. That is as true as now as it was then and for ever.

According to Paul N. Courant, Financial Institutions should accept exchange of various currencies because tlu·ough facilitation of the movement in and out of various cunencies, countries increase the rate of internet penetration. One of the first developments in the movement towards globalization was the growth of the foreign cun·ency markets in Europe in the 1960s. A first, the main currency involved was the U.S Dollar and hence Eurodollar markets were the first to develop. Today, the Euro bond market is in international market where bonds of various types, dominated in various national cun·encies, are issued and sold to customers located tlu·oughout the world. Through the movement of these currencies they involve a lot of manpower hence providing employment oppmtunities with the existing speed of growth of modem technology.

According to Emmanuel Lallana, putting up a law that accommodates electronic contracts and signatmes within financial institutions and outside the financial institutions. The purpose of the model law is to offer national legislators a set of internationally acceptable rules as to how a number of legal obstacles to the development of electronic banking may be removed and how a more secure legal environment may be created for electronic banking. Work on the model law can be under taken in recognition of the fact that in most situations, national legislation is either

11 "outdated" or "inadequate" on the negative basis that it does not contemplate electronic banking, or on the basis that it positively restricts the use of electronic commerce by including requirements that don't easily translate into on electronic environment, for example by requiring "writing", "signing" or "originals." If this is done, then the insecurities like breaking into other people's information will be reduced and modern technology will play its role smoothly.

According to Yayehyirad Kitaw, (2006) Financial Institutions should get involved in the management of some schools like Banking and Finance Institutions and here they provide appropriate knowledge that can suit the existing level of modern technology in financial institutions. It can be done by buying shares in such schools. Training of students in such schools in the use of software like QuickBooks, Tallies and others can help reduce the level of illiteracy and increase the number of experts in computer knowledge. This also reduces the burden of modern technology in reducing the level of illiteracy. Opportunities offered by ICTs tlll"ough the e-learning programs are very important. If a school Net Program is introduced in Uganda to connect more than 500 schools, it can create opportunities to the citizens to be familiar with Information and Communication Technology (ICT) applications and increases the awareness of the public about modern technology.

According to Michael Sengo, the manger in charge of account management at compuscan, the government should reduce taxes or involve in policies that exempt electronic banking hardware and software from taxes. Information and Communication Technology (ICT) companies m Uganda are attributed to fast growing technology up table levels among the local firms to governments. If the taxes are removed on the services like the internet then a big number of people can easily access the internet at lower costs hence solving the issue of the high costs of internet. Raymond Badanga of Neptune software, business in Uganda can become more convenient because of government's policy of exempting taxes on software, thus in the near future Uganda can fall under the bracket of Afi·ican countries where especially banking technology is well embraced if such policies are maintained and therefore there will be a chance to exploit modern technology to the maximum in financial institutions.

12 Late adopter opportunities; The commercial banks in Uganda should take advantage of the already developed best and existing software applications. This reduces the costs of administration. The costs of installation and attaining new soft wares sought cheap in the beginning but at present economy it is very expensive including maintenance. If such oppmtunities are used, financial institutions will control the rate of increase of cyber insecurity issues (Jon Clark 1988).

Commitment of the government; The Ugandan government should consider information communication technology as an indispensable tool to alleviate poverty and facilitate a state transformation aiming on effective and efficient service delivery. This makes the government obtain suppmiive policies rather than restrictive policies and hence modern technology is given a chance to grow in financial institutions without barriers. Policies like massive sensitization will be employed to control illiteracy rates and other problems that discourage people from taking modern technology a priority. It can initiate commendable information communication technology policy frame works and several e-government projects (Jon Clark 1988).

Through liberalization of the economy and privatization of the government financial institutions can transfmm the telecommunication market and the electronic banking to modernity. The degree of connectivity of a given country depends partly on technical factors, but also depends on the regulatory environment liberalization of the economy can open the weak financial institutions to chances of getting more funds that can be used to develop and exploit modern technology at the maximum point. In N epa!, the decision of the government to allow ISPs to have their own international cmmectivity using VSAT technology prompted an increase on the international internet board width available from 320Kbit/s in May 1999 to over !Mbit/s by the end of 1999 and to 10 Mbit/s (down link) in 2001. Regulations have an impact on the level of international internet connectivity, the diffusion of internet services and above all the cost of these services to end users. As mentioned, several LDCs have restrictive and protectionist telecommunication regulations. Monopolies are fairly common and while some countries allow the presence of more than one internet service provider in the territory, only a few of them accept competition in international connectivity. (Binyam Tamene (2009), Daily Monitor.

13 Electronic banking should significantly affect a maJor barrier to competition for consumer accounts due to laws restricting depository financial institutions fi·om establishing branches outside a limited geographical area. Banks headquartered in one state cannot build branches in other states and therefore have not been able to compete effectively in those states for consumer accounts. In many states especially in the South and Midwest, banks are limited to operating fi·om a single office. These geographic limits on branching have not prevented banks around the country from competing for large corporate accounts, partly because corporations conduct much of their business by telephone and partly because loans and deposits of these customers are large enough to pay for banks to send people to corporation offices when personal contact is needed. Consumers and small business call on the banker. Therefore, those banks with nearby offices attract consumer and small business customers more readily than do banks with offices that far away. Electronic banking reduces the need for small customers to come to the bank. Therefore, the geographic location of the bank branches becomes less impmiant in the customer's decision on where to bank. If the above is done, the absence of financial networks as a challenge to modern technology in regulating the level of employment in financial institutions will be eliminated.

14 CHAPTER THREE METHODOLOGY

3.1 Introduction This chapter deals with the methodology that will be used in cmTying out the research. It involves the research design, study population, data collection methods, sampling procedures and data quality control.

3.2 Research design During the research, the cross- sectional survey design will be used. It will involve an in- depth study of a particulm· subject of the population in order to secure information concerning the effects of modern technology on the level of employment in financial institutions. The study will be conducted in Makindye division Kampala District. A case study of Equity Bank Katwe branch Kmnpala. The study will be qualitative in nature guided by questionnaire and this will help the resem·cher collect relevant data about the given topic within the shmiest period oftime.

3.3 Unit of inquiry The units of inquiry will be the employees of Equity Bank

3.3 1 Study population The study will employ 3 5 respondent including five officials fi·om equity Bank and I 0 customers of Equity bank, and 20 mnong the residents of Luwafu, Nabisaalu and Nkere zone all in Makindye Division. Gender balance will be the first priority mnong while choosing respondents in this study area.

3.4 Sampling procedure and sample size Stratified and simple random smnpling method will be used to obtain respondents. With this method, only the respondents that are conveniently available to the researcher will be exploited. For stratified random sampling, varies strata and classes will be constructed basing on different age groups, and sex from which the required number of respondents will be randomly selected.

15 Table 1: Showing sample size for 1·espondents Respondents Number Percentage Bank manager 1 2 Loan officer 1 2 Other employees 2 4 Human research manager 1 2 Equity bank clients 10 20 People leaving in Makindye 20 70 Total 35 100

3.5 Data Collection Methods and instruments According to Amin (2005), this concerns the methods and the instruments that will be sue during data collection, however both primary and secondary data collection techniques will be employed.

Data collection methods that will be employed will involve interviews, observation, questionnaire and documentation.

3.5.1 Primary Data source 3.5.1.1. Interview guide Gathering of primary data will involve interaction between the researcher and the respondents of a way of interviewing the respondents. Formal interviews with interview guide investigated complex and sensitive issues as Kakooza (2000) asserts clarifications as well will take place to enable the interviewee reveal his/her view point as observed by Morshal and Bossman (1989) and this will assist the researcher in obtaining first hand infmmation from the selected respondents.

3.5.1.2 Observation This method will be used so that the researcher may accumulate all possible relevant information on the effects of modern technology on the level of employment in financial institutions. It will

16 enable the researcher to observe fully such effects on the demand and supply of labour in financial institutions.

3.5.1.3 Questionnaire Both open ended questionnaire will be designed in order to collect information form respondents in a projected time fi·ame. The questions will be designed or set according to the category of people in the table drawn above. (closed ended questions will be used in order to minimize vague and unwanted despondences and the whole exercise expected to take three weeks.

3.5.2 Secondary source 3.5.2.1 Documentation Documented data will be used in this research. It will contribute a lot in secondary data collection. The documents that will be used will include the records of recruitment and dismissal of workers in this equity Bank, the qualification of the majority employed in this Bank. It is fi·om this data that the effects of modern technology on employment level will be reflected.

3.6 Data analysis and interpretation According to Amin (2005) Data analysis involves making sense out of the text, it involves moving deeper into understanding the data and making interpretation. The researcher will edit the questionnaires schedules to ensure competences, unifmmity, accuracy and consistency of all the questions that will be used. After data collection the X 2 test will be chosen to be able to draw conclusion in the findings of the research percentages will also be computed for other related items to support the chi- square tested results.

X2 = 2: (fo -fd fe Where x2= chi- square calculated fo= frequency observed fe= frequency expected 2: = summation

17 3. 7 Validity of instruments In order to test and improve on the instruments, the researcher will avail the first draft to colleagues doing the same course and alter to the lecture. They will look at the items, check the language, relevancy, comprehensives, content and length of the questionnaire and interview guide. These instruments will later be developed under close guidance of the supervisor with whom the researcher will make necessary adjustments.

3.8 Reliability of the instruments In order to ensure reliability of instruments, the researcher will conduct a pilot study using 10 respondents from Nkere zone Katwe and the instruments will be pre- tested to ascertain the exhaustiveness of the interact guide and inconsistences.

3.9 Ethical consideration The researcher will get a letter of introduction form the school of economics and applied statistics that will be presented in case there is need. The researcher will also control his emotions and avoid probing much in the private life of the respondents. The questi01maires used will neither indicate the name nor the tribe of the respondents to avoid inconveniences.

18 CHAPTER FOUR DATA PRESENTATION, INTERPRETATION AND ANALYSIS OF THE FINDINGS

4.0 Introduction This chapter deals with data presentation, interpretation and analysis of the findings. It begins by assessing the social demographic characteristics of the respondents in terms of sex (Gender), age, education, income status, religion and occupation. The analysis of the findings followed in respect to the effects of modern technology on the level of employment in financial institutions, challenges facing modern technology in financial institutions in relation to the level of employment opportunities and the possible solutions to the challenges faced by modern technology in financial institutions.

4.1 Social demographical characteristics of respondents These were analyzed in terms of gender, age, education, poverty status, religion and occupation of the respondents tabulated below;

19 Table 2: Social demographic characteristics ofthe respondents Social demographic Description Frequency Percentage characteristics Gender Male 20 57 Female 15 43 Poverty status Below poverty line 18 51 Above poverty line 17 49 Educational level Primary 11 31 Secondary 9 26 University degree 15 43 Occupational Peasants 15 43 Employed 10 29 Petty traders 5 14 Casual laborers 5 14 Marital Status Single 5 14 Married 15 43 Widowed 5 14 Divorced or separated 10 29 Age range 20-30 10 29 31-40 15 43 41-50 7 20 51 and above 3 8 Religion Catholic 10 29 - Pentecost 5 14 Protestant 5 14 Moslem 15 43 Source: Data collected from the field by the researcher.

The above table 2 shows that 57% were male and 43% were female. This means that the study was gender sensitive since issues concerning modem technology and employment affect both men and women. Modern technology is still one of the main reasons for employment in financial 20 institutions in Makindye. Whereas some groups established to cease accessibility to jobs in Equity Bank like the expecting mother, others like those with degrees in Business and information Technology related courses were open to both men and women.

Table 2 above also indicates that respondents between 20-30 years formed 29%, 43% of the respondents were between 31- 40, 20% were between 41-50 years and over 51 years and above yield a percentage of 8%. This implies that adults and youths are most attached to the employment opportunities offered by financial institutions and are fighting hard to be considered among he few and also use their brains to create space for the other people who did not get the chance to be considered in the institutions. The majority of the respondents were between (31- 40) meaning they have not given up with their ambitions of using their brains to develop the rest of the world with the existing modern technology.

The researcher also found out that 51% of the respondents were below the poverty line while 49% were above the poverty line as indicated in the table 2 above. This means that majority of the respondents survive or less than a dollar per day as per standards of the World Bank. This means that many people are still poor and need jobs from these financial institutions and loans to boost their standards ofliving together with getting exposed to modem technology.

From the table 2 above 43 of the respondents were married, 14% single, and 29% divorced andl4% widowed. The majority of the respondents were matTied mean that they badly need jobs from these financial institutions to raise their welfare and look after their families. Marginalized groups of widows, divorced and sepat·ated represents the need for embarking towards regulatory methods of modern technology in creating more jobs than reducing the employment opportunities for them to also have a statting point of development in their lifestyle.

From the study findings, 4 3% of the respondents were peasants while 29% of the respondents employed, 14% petty traders and causal laborers were 14%. Existence of too many peasants indicates a sign of unemployment in an area and illiteracy. Unless an action is doe to reduce the level of illiteracy such that people may find jobs according to the level of modem technology, it may not be easy to have a transformed economy in this area.

21 The religious affiliations of the respondents were as indicated above with Moslems 15 (43%) leading closely followed by Catholics 10 (29%), Pentecost 5 (14%) and protestants 5 (14%). The study was therefore inclusive, pluralistic, balanced and open to all religious beliefs. This implies that the approach to modem technology and the level of employment oppmiunities is a holistic strategic frame work enabling all people in the society irrespective of religion to improve their welfare and standaTd ofliving in a sustainable manner.

Also from the above table, the majority of the respondents (43%) had an education level of university degree, followed by primary 31% and hen secondaTy (26%). Implying that the majority of the respondents were literate class who has at least attained the level of formal reasoning, problem solving, critical analysis and systematic judgment abilities. Through employment in financial institutions such people can easily get rained and catch up with the existing modern technology and hence explore more about ways of creating more jobs with the existing modern technology. For the primaTy level, they can also be borrowed at lower interest rates and budget it properly to start some businesses that can help raise the profits of financial institutions and extend their services to more remote aTeas.

4.2 The effects of modern technology on the level of employment in financial institutions. The reseaTcher was guided by research question to analyze and interpret the findings in respect to this section. The Question stated, "What are the effects of modern technology on the level of employment oppmiunities I financial institutions". Respondents were asked to relate various statements related to this question related to the extent of truth or the degree of their validity. Responses solicited were tabulated as in the frequency and percentages as below;

22 Table 3: The effects of modern technology on the level of employment in financial institutions. The effects of modern Agree Strongly Disagree Strongly Not technology on the level of agree disagree sure employment in financial F % F % F % F % F % institutions. Modern technology leads to 30 86 5 14 massive unemployment and displacement of workers modern technology makes jobs 10 29 20 57 5 14 obsolete Modern technology causes a 10 29 15 43 5 14 5 14 feeling of insecurity at work. Modem technology leads to 20 57 10 29 5 14 indivisibilities at work Source: Data collected from field by the researcher Key: % - percentages F - Frequencies

From table 3 above, 86% of the respondents agreed and 14% strongly agreed that modem technology leads to massive unemployment and displacement of workers. This shows that as modern technology develops, more people are laid off due to limited skills. Further clarification brought to light that the unemployment rate in financial institutions varies greatly among various groups of people. It tends to be several times as high for teenaged workers as for older persons. Unskilled people experience about three times as much unemployment as more skilled workers. This is because most people lack the appropriate resources that can help them get the appropriate skills to fit in the positions that can minimize costs and make profits in financial institutions and they end up being ranked among the majority who are not fit to work in those institutions, or those who are already there to be considered among the low skilled persons and given lower positions among others. Thus modern technology leads to displacement of workers. Table 3 above also indicates that 29% of the respondents Agreed, 57% of the respondent strongly agreed, and 14% of the respondents disagreed that modern technology makes jobs obsolete/end I

23 financial institutions. This means that the more technology develops especially in terms of automation, it eliminate he low skilled jobs and increases the demand for highly skilled workers. Many people are needed to design, build, and maintain automated systems. It was pointed out that introduction of Automated Teller Machines (ATMs) enable people to make a variety of banking transactions at any time. A customer can use an A TM card to make Bank deposits, withdraw a limited amount of cash, Transfer funds between accounts, or get a cash advance on a credit card. During the field study, some counters were spotted with a smaller posts, indicating, "TILL CLOSED" and for long period of time. This brought a clearer picture that modem technology leads the elimination of low skilled jobs since bankers have reduced direct interactions with their clients.

According to table 3, 29% of the respondents agreed, 43% strongly agreed, 14% of the respondents strongly disagreed and 14% were not sure were not sure that modem technology causes a feeling of insecurity at work. This means that the problem of stress has become a major issue in the present time yet out life conditions are less stressful than our ancestors. During interaction with the bank official, he mentioned that one has to run as fast as they can to maintain their positions at work, or be pushed to the bigger positions. It was pointed out that technological change where job security is threatened, coupled with feelings of not being able to adapt new skills are great causes of stress among the workforce. This makes those who can't cope up with the speed at which modern technology is moving, being replaced with new workers in tum, or machines. It was established through estimation, that the ratio of machines to manpower is close to 1: 15 and above, which means it is very easy to replace man power with machines.

Also fi·om the field study, although I 4% of the respondents were not sure, 57% of the respondents agreed, 29% strongly agreed that modern technology leads to indivisibilities at work. This means that there are machines in financial institutions that may require a lot of manpower in the beginning, for the case of yielding more quality and quantity and when the demand reduces, those workers are laid off. This is one of the causes of unemployment in financial institutions. During the study, it was mentioned that many financial institutions tend to employ a lot of employees at the beginning and soon or later, they keep on sweeping them out one by one after the decrease in demand of their output.

24 4.3 Challenges facing modern technology in financial institutions in relation to the level of employment opportunities. In the same way, the researcher was guided by research question two to analyze and interpret the findings in respect to this section. This question stated: "What are the challenges facing modern technology in financial institutions?"Some of the challenges were either fi·om the irregularity of the financial institutions, or from the household problems. Various statements were set in conjunction to this question and were administered to cross-section of 3 5 respondents who contributed to the primary data. Their ratings revealed validity of the statements as tabulated in frequencies and percentages below. Table 4: Challenges facing modern technology in financial institutions in relation to the level in employment. Challenges facing modern Agree Strongly Disagree Strongly Not technology in financial agree disagree sure institutions in t·elation to the F % F % F % F % F % level of employment. Low level of internet penetration 20 57 10 29 5 14 and poorly developed telecommunication infrastructure Lack of a suitable legal and 10 29 15 43 5 14 5 14 regulatory framework for the e- commerce and e-payment. Misallocation of resources 10 29 15 43 5 14 5 14 Government intervention 25 71 6 17 4 12 High rates of illiteracy 10 29 25 71 Absence of strong financial 15 43 19 54 I 3 networks that link different financial institutions - Frequent power interruption 20 57 13 37 2 6 Cyber insecurity issue 15 43 15 43 5 14 Source: Data collected from field by the researcher Key: % - percentages F - Frequencies

25 From the table 4 above, low level of internet penetration and poorly developed telecommunication infrastructure was strongly supported by 57% of the respondents who agreed with the statement, and 29% of the respondents who strongly agreed. This means that as the internet is one of the basic requirements for the development of modern technology in financial institutions, it is not fully attained to the extent of effecting smooth exploitation of modern technology. During the field study, it was established that financial institutions struggle hard to access the best of the internet services but they end up not getting it to the capacity they want due a few mentioned reasons like inte1ruption of their servers by other internet service providers. During the interview with the bank official, some cases where the MTN Band intenupts Uganda telecom band as their internet provider, were mentioned. It was established that this does not only slow down the speed of the internet but also intenupts the telecommunication system. Too many subscribers on one network provider was also mentioned among the problems that slowdown the internet services. Changes in weather conditions were also mentioned, where internet is always on and off in windy conditions and slows down in very shiny conditions. However, 14% of the respondents were not sure as tabulated in table four above. This means that such a challenge leaves a big portion of modem technology unexplored.

Also fi·om the table 4 above, where as 14% disagreed and 14% were not sure, 29% of the respondents agreed and 43% of the respondents strongly agreed that there is lack of a suitable legal and regulatory framework for the e-commerce and e-payment. This means that the government of Uganda doesn't put much effort in the regulation and monitoring of the services in the banking industry. This makes some banks charge very low interest rates in order to get customers, avoid the advancements in modem technology and thus its regulatory role of employment is tampered and not fully fulfilled. This was established during the study. It was established that it makes some banks close some of their branches because they can't make enough profits. A case where Equity closed its corporate branch in kamwookya because it was not managing itself properly was mentioned. The challenge is how to put these laws and they don't limit or affect the role of modem technology in financial institutions. However, it was established that through the copyright ordinance Cap I 6 can be considered as supportive legislation although there is no recognition for the computer software or programs.

26 From the field study, where as 14% disagreed and 14% were not sure, it was observed that 29% of the respondents agreed and 43% of the respondents strongly agreed that misallocation of resources is one of the challenges facing modem technology in its role in financial institutions. This means that misallocation of resources like frauding of funds affects the smooth running of modern technology. Embezzlement of funds and corruption were mentioned as chief causes of the slow growth of modem technology in financial institutions. During the field study, cases where some bank officials have accounts that are not revealed to the higher authority ,were mentioned, presentation of different books of entry and schedules from computers to the auditor, some auditors being bribed to present wrong figure to the higher authority. The challenge is what modem technology can do to get rid of such challenges that limit its role in financial institutions. It was established that without a strong automated system that can monitor and allocate misallocated funds, modern technology still has a logway in developing financial institutions.

Government intervention was highly emphasized among the challenges facing modem technology in financial institutions. According to the table 4 above, where as 12% of the respondents were not sure, 71% agreed and 17% strongly agreed with the above statement. This means that the government interrupts in the duties of modern technology in financial institutions. Dming interaction with the bank official, it was established that government takes part in regulating the salaries of workers in financial institutions. He further added that the govemment has brackets according to the level of education. This limit thorough exploitation of modern technology because some think they are not paid enough to go beyond certain limits of exploration and in most cases these are people who are so inventive. The challenge is how modern technology can attract these people to work harder and change with the speed at which modern technology is changing. However, during the field study, it was established that managers have improvised means like provision of salary advances and allowances to make their employees work harder and exploit all their efforts to give chance to modern teclmology grow without related obstacles.

Also, 29% of the respondents agreed, and 71% strongly agreed that the high rate of illiteracy has something to do with limiting the growth of modern technology in financial institutions. This

27 means that many of them would be great employees; feasible and realistic are denied the opportunity to work in financial institutions since they don't have the right qualifications. In this case they are even denied the chance to explore their capacities in exploration of modern technology. During the study, it was established that banks would love to employ as many people as they can but most of the people are not literate to the required qualifications of modem technology. The challenge is how modern technology can penetrate through the financial institutions when most of the people are illiterates in the country. During the interaction with the branch manager, he said that the most valuable component of computer literacy knows how computers work and operate which most people lack and this leaves a bigger portion of modern technology unexploited.

Absence of strong financial networks that link different banks was also pointed out by majority of the respondents as a challenge to modern technology in financial institutions in regulation the level of employment opportunities. Whereas 3% of the respondents disagreed saying the government has a lot of money it collects from taxes to build those strong financial net works, 43% of the respondents agreed and 54% of the respondents strongly agreed with the above statement as tabulated in table 4 above. This means that there is need for a strong financial network that can serve to look for new advancements in modem teclmology and extending them to the financial institutions at a lower cost to reduce the problems associated with h e challenge of high administrative costs and others. During the study, it was pointed out that the government may have reduced or removed the taxes on some e-hardware and software including computers themselves but it can't provide the funds for putting those machines in place and it is very costly to install such components. If afforded, the challenge remains on whom to install them and this calls for imported manpower which is very expensive. This makes some areas in the country go without those e-banking equipment, which slows down the growth of modem technology in financial institutions and its role in regulating the level of employment opporttmities for it's not fully exploited. However, banks and other financial institutions have tried to get heavy loans to facilitate the availability of the e-banking services.

Frequent power interruption was also highly forwarded among the challenges facing modem technology in financial institutions. According to the table 4 above, although 6% of the

28 respondents were not sure about the above statement reason being that they don't use financial institutions and don't have power at home, 57% of the respondents agreed and 37% of the respondents strongly agreed with the above statement. This means that modem teclmology is not given a chance to fully play its role at its maximum due to power surges and inte1ruptions. The current power shortage was mentioned among others. A case where power surge had spoilt two computers and one repaired which reduced their rate of operation was mentioned. It was also mentioned that net works work hand in hand with electricity such that when there is no electricity; there will be limited access to the intemet, the local area net work and also the Automated Teller Machines. The challenge is how modern teclmology can work without electricity. However, financial institutions have tried to get access to the Direct Current power generators which also have their associated problems.

Cyber insecurity issue was also mentioned among the challenges of modem teclmology in regulating the level of employment opportunities in the financial institutions. However, 14% of the respondents were not sure whether cyber insecurities are really a big problem to modern teclmology in financial institutions, 43% of the respondents agreed and 43% of the respondents strongly agreed with the above statement. This means that there are a lot of insecurities in financial institutions in terms of record keeping and keeping books of entry. It means that however much a computer is pass warded to keep the information there safely; it cannot survive the likes of viruses which disorganize the data. The issue of people who use the internet to break into other peoples' websites and accounts to fraud them (referred to as hackers) making modern teclmology iJTelevant in financial institutions was mentioned. The issue of Virus attacks that disorganize the information in financial institutions was mentioned. The challenge is how modern teclmology can overcome these issues in financial institutions that hinder its smooth running in financial institutions. During interaction with the bank official, he repo1iedly said that they had received about 3 cases where people complained hoe their accounts had lost big sums of money and the audits of the bank showed that the funds had been transferred to other people's accounts by the account holders themselves. However financial institutions have tried to get access to strong anti-viruses to reduce the rate at which data is lost in financial institutions. They have also tried to notify the public about such insecurities that may occur.

29 4.4 Possible solutions to the challenges facing modern technology in financial institutions. To analyze and discuss the findings in respect to this section, the study was guided by research question three, which stated: "What are the possible solutions to the challenges faced by modern technology in financial institutions?" A set of relate statements in collaboration with the above research question were administered to a cross-section of 3 5 respondents who contributed to the primary data. Their ratings revealed to the objectivity of the statements as tabulated in frequencies and percentages below;

Table 5: Possible solutions to the challenges faced by modern technology in financial institutions. Possible solutions to the Agree Strongly Disagree Strongly Not challenges facing modern agree disagree sure technology in financial F % F % F •;. F % F % institutions Though putting up a law that 25 71 6 17 4 12 accommodates electronic contracts and signatures Through liberalization of the 30 86 5 14 economy and privatization Facilitation of exchange of other 25 71 6 17 4 12 CU!TenCieS Getting involved in management 30 86 5 14 of schools especially higher institutions Use of Later adopter oppmiunities 6 17 25 71 4 12 through reduction of taxes by the 10 29 25 71 government Source: Data collected from field by the researcher Key: % - percentages F - Frequencies

30 From the table 5 above, 71% of the respondents agreed and 17% of the respondents strongly agreed that putting up a law that accommodates electronic contracts and signatures can be a solution to some of the challenges facing modem technology in financial institutions. However, only 12% of the respondents disagreed. This means that many people are touched by the issue of a law that can accommodate the electronic contracts and signatures. When those laws are put in place, the cases of cyber insecurity can be reduced. It was also emphasized that putting up such laws can give a chance for more people who are not introduced to the financial institutions to join hence reducing the level ion illiteracy in the society and this can give chance o modem technology to ply its roles smoothly.

Liberalization of the economy and privatization were also largely mentioned as solutions to some of the challenges facing modern technology in playing its role in financial institutions. Whereas 14% of the respondents were not sure, 86% of the respondents agreed to the above statement as tabulated in table 5 above. This means that economic liberalization and selling off of some government owned financial institutions can open up doors to private entrepreneurs who may have the funds to extend the e-services fully in financial institutions. This may also prompt to increase the international internet bandwidth available to more than 10 Megabits per second and hence the level of internet penetration increased at lower cost .It was added that privatization may open chances to employees of such institutions to get salary increment and become more efficient and can then look for new skills that can sustain the speed at which modern technology is moving in financial institutions and even create more jobs for other people.

Also from the field study, facilitation of exchange of various foreign currencies was mentioned among the solutions to the challenges facing modern technology in financial institutions. According to the table 5 above, whereas 12% of the respondents disagreed, 71% agreed and 17% strongly agreed to the above statement. This means that exchange of currencies can help increase the relationship with other countries who bare those currencies and this can assist in extending their knowledge and funds to such institutions in the country. Cases of high administrative costs and expenses can be reduced. Also during the field study, it was established that through forex exchange, foreign exchange is also promoted which includes internet facilities, expertise personnel fi·om developed countries, Equipment and many other related advantages. It can also

31 attract investors to invest in supply of internet services hence increasing the accessibility of the internet services which is the major driving force in modern technology growth. Therefore this can help in solving the problem of low internet penetration in financial institutions. If the above is put into practice, barriers to the roles of modern technology can be reduced in financial institutions.

From the table 5 above, although 14% were not sure, 86% of the respondents agreed that through getting involved in management of schools especially higher institutions can be a solution to some of the challenges facing modern technology in playing its role in financial institutions. This means that the outgoing students of higher institutes have a chance to get exposed to basic skills of what is done in the financial institutions and it can also help reduce the working experience issue in the financial institutions. During the study, it was established that management of schools and higher institutions can help reduce the number of computer illiterates and that such people can stati from the basic skills while exploring modern technology when they go out to look for jobs in financial institutions and that it may increase their chances of getting employed in financial institutions. People will live to fully exploit modern technology than sitting to wait for what modern technology has for them and hence the rate at which illiteracy is a burden to modern teclmology in financial institutions will be reduced.

Use of Later adopter opportunities was also mentioned among the possible solutions to the challenges facing modern technology in playing its role in financial institutions. According to table 5 above, where as 12% of the respondents were not sure, 71% of the respondents strongly agreed and 17% of the respondents agreed with the above statement. This means that the ordinarily used software are easy to master and develop than the newly developed software and if financial institutions can go back to that software, it can be the statiing point of understanding the new ones better. From the study is was established that if financial institutions use later adopter opportunities, challenges like illiteracy, increasing competition and its associated problems can be reduced and hence modern technology can have the chance to accomplish its roles smoothly. It was further mentioned that introduction of new software before the old ones are mastered is very dangerous because it reduces the chances of exploitation of the already introduced software.

32 Also from the field study, through reduction of taxes by the government can help to solve some of the challenges facing modern technology in playing its role in financial institutions. From the table 5 above, 71% of the respondents agreed and 29% of the respondents strongly agreed to the above statement. This means that taxes are still a big problem to the smooth growth of modern technology in financial institutions and if they are removed, they are sure of extending the benefits of modern technology to all pmis of the country. During the study it was established that the taxes paid to Uganda Revenue Authority by financial institutions and the government fines contribute to the sluggish development of modern technology I financial institutions. It not only reduces the amount of profits but also discourages financial institutions fi"om impmiing the number of electronic equipment they would wish to impmi or install around the country. Therefore reduction of taxes can help solve the challenges brought about by the high taxes charged on some equipment like high administrative costs and others. Also from the field study it was pointed out that it remained unclear on where this high and fixed tariff across all Banks originated but the regulator leaves it in operation, it can be safely interpreted that Banks operate this unfair tariff with backing from Bank of Uganda

33 CHAPTER FIVE DISCUSSION, CONCLUSSIONS AND RECOMMENDATIONS

5.0 Introduction. In this chapter, summaries are made, conclusions reached as well as recommendations

5.1 Discussion The main concem of the study as indicated in chapter one was to investigate the contribution of modem technology on the level of employment opportunities in financial institutions. This is based on the results presented in chapter four of the repmt as given by the respondents guided by research questions.

Resea1·ch Question one: What are the effects of modern technology on the level of opportunities in financial institutions? The study findings revealed the effects of modern technology on the level of employment oppmtunities in financial institutions such as automation leading to mass unemployment and displacement of workers, causing a feeling of insecurity at work, making jobs obsolete, leading to indivisibilities at work and making of the old skills absolute. These findings colerate with the view of peter s. Rose (2006), Michael J. Handle (2003) Marion R Daugherty, Jioner charks( 1987), Zhorn (1998), Tonny Miller(1989:72) and Kootz Harold (1998). According to those scholars, modern teclmology has effects like; Massive unemployment and Displacement of workers, causes a feeling of insecurity at work, Leads to indivisibilities at work.

Research question two: What are the challenges facing modern technology in financial institutions in relation to the level of employment opportunities? The study noted a number of challenges facing modem technology in financial institutions including the following; Low level of internet penetration and poorly developed infrastmcture, Lack of a suitable legal and regulatory framework for e-commerce, high rates of illiteracy, frequent power inte!Tuptions, and cyber security issues. All the above augur with the views of

34 Lawrence D (2010),Katumba Mathias, Shemi A P (2002), Kitaw (2006)and Turyamuhaki Emmanuel kikoni. In this respect, modem technology is compounded by some challenges both within the financial institutions and others from the political environment.

Research question three: What are the possible solutions to the challenges facing modern technology in financial institutions? The study findings established possible solutions to the challenges facing modern technology in financial institutions in its role of regulating the level of employment oppmiunities in financial institutions. These include economic Liberalization to increase the international internet band width available, putting a low that accommodates electronic contracts and signatures to reduce the cyber insecurity issues, Management of schools to reduce the number of illiterates and reduction in taxes by the government to increase on the accessibility of the e-banking services. However, these remedies should be sequenced by the political will to ensure that adequate attention is drawn from all corners.

5.2 Conclusion From the field study, the following conclusions were reached; financial institutions can be able to create job oppmiunities to a bigger number of people in the economy but it has a lot of effects although it is also challenged in its role of regulation employment oppmiunities in financial institutions. Most of the effects come about due to the uncontrolled speed at which modem technology is growing in financial institutions/ the economy in general. Despite these effects, it has on financial institutions, modern technology is a better priority of creating more employment oppmiunities.

However, a number of challenges or constraints arising fi·om inability of the society to meet its requirements are facing modern technology today. Most of these challenges became an obstacle to modem technology in creating employment opportunities in financial institutions. As long as the society especially financial institutions in this case eliminates all the mentioned challenges to modern technology, financial institutions in Kampala will have space for more people to work there with the existing speed of modern technology growth.

35 Never the less, it is possible to get the best out of modem teclmology in financial institutions especially in creation more employment opportunities that reducing them as it is the order of the day in the present situation in Kampala today. If privatization and economic liberalization, facilitation of exchange of various foreign cmTencies, putting laws that accommodate electronic signatures and contracts, management of some schools especially higher institutes of leaming, and reduction or total removal of taxes by the government is done, unemployment in financial institutions will remain a mere tool of expression other than deeds.

5.3 Recommendations In order to ensure effective and efficient performance of modem teclmology in regulation of employment opportunities in financial institutions, there is need to look critically at the challenges or baniers to modem teclmology that limit it from creating more employment opportunities in financial institutions. As it is the order of the day in the cunent situation and provide possible solutions through the following;

Through privatization of government institutions, the government g1ves a chance to nonperforming institutions to a chance to get more capital to employ appropriate teclmology that can help meet the demand for more employment opportunities in financial institutions.

The government should put up a law that accommodates electronic signature and Contracts within and outside the financial institutions to reduce the modem teclmology insecurity related problems like hacking which limits a big nmnber of people from getting employed in financial institutions. This can pave the way for modem teclmology to creating more employment opp01tunities in financial institutions.

Financial institutions should get involved in management of some schools especially higher institutes and this can help create employment opportunities in financial institutions in a way that the people looking for the jobs will have appropriate skills to work in these institutions and will also lead to expansionary policies which create more jobs for the people. Here, financial institutions should emphasize the basic/major qualities of a banker in relation to modem

36 technology such that as the student get out of school, they know what is happening in financial institutions and besides that also the level of illiteracy is reduced in financial institutions.

The government should adopt methods/policies that reduce or remove taxes on modem technology related instruments, that is; the hardware and software and the operational taxes that tend to raise the cost of administration which is one of the causes of modem technology failure in financial institutions in creating employment oppmiunities. The high administrative costs lead to the financial institutions longing for only expertise personnel who can multitask and yield high profits in a shmi period of time hence leaving out the other group of people.

Financial institutions should effect the baiTiers to competition for consumer accounts due to laws restricting depository financial institutions from establishing branches outside the geographical areas. This creates immediate contact between the bank final bank managers and the other people like the job seekers will easily get employed in financial institutions with the existing modem technology

37 REFERENCES

Amin, M. (2005). Social science research: Concpets and analaysis. Kampala : Makerere Douglas D.Purvis, Paul N Courant and Richard G. Lipsy (1992); Economics, Tenth Edition, Published by Haper Collins College Publishers

Ddumba J.S (2004) Basic Economics for East Africa: Fountain publishers Kampala Uganda

Emmanuel Lallana, Patricia J. Pascual, and Zorayda Ruth Andam, SMEs and E-commerce Eugene F. Fundamentals of Financial Management I Otl' Ed Elm Street Publishing Services, Inc USA. Grameen Bank (2005) Micro Credit, Internet www.microcredit.htm

Ian McLaughlin and Jon Clark 1988, Technological Change at work. Open University place Celtic court 22 Ball moon

King, Robe1i E. and Levine, Ross (1993a), "Financial Intermediation and Economic Development." in Financial Intermediation in the Construction of Europe. Editors: Colin Mayer and Xavier Vives. London: Centre for Economic Policy and Research, pp. 156-89.

Lawrence D.Schall, Charles W (2010) Financial Management, 8 Edition, Printed by Me GrawHill.Inc

Mathias Katamba- Chief executive officer, Microfinance Uganda Limited

Michael E Todaro 1982, Economics for a developing world. Longman group limited, England.

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38 Martin, Antoine (2006) "Liquidity provision vs. deposit insurance: preventing bank panics without moral hazard," Economic Theory 28, 197-211.

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Ranciere, Romain and Aaron Tomell (2011) "Financial liberalization: Efficiency Gains and Black Holes," mimeo., April.

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39 APPENDIX I QUESTIONNAIRES

Dear respondents. I am a student at Kampala international university -main campus pursuing a bachelor's degree in economics. I am conducting a research on the effects of modern technology on employment in financial institutions. You are kindly requested to fill in the right answer or alternatives given. The infmmation obtained will handled confidentiality and shall be used only for study purposes. Do not indicate your name anywhere on this questionnaire.

Questionnaire I. Respondents: Proprietor/proprietress/ owner/ manager of enterprises. Section A (Tick or write the appropriate answer.) 1. Street name ...... 2. Name of enterprise

3. Scale of business: small D medium D

4. Type of business I economics activity D D 5. Sex: male female

6. Age: 20-30 D 31-40 D 41-so D 51 and above D

8. Marital status Single D Man·ied D Widow D Divorced/ Separated D

9. Religion ......

40 I 0. Education attainment Primary school D Secondary school D Technical /vocational D Graduate 0 Others specify SectionB 1. How long have you been doing this business?

2. Have you applied for a job in any bank before? D D Yes No 3. Did you get the job? D D Yes No 4. What were the requirements for the Job?

5. Did you have all the requirements? Yes D No D

6. How long did it take you to get the job? Not so long D So long D

7. Why do you think you failed to qualify for the job?

8. What do you think of modem technology in general? Good D Bad D Indifferent D 9. why?

10. What's the level of technological growth in this area? High D Moderate D low D

41 II. Do you usually get any form of sensitization on modern teclmology in this area? Yes D No D

12. If yes, How often? Once in a month D Once in a week 0 once in a year D

13. How is it canied out? (Method of sensitization)

14. Has it helped you anyway? Yes 0 No 0 15. If yes, how has it helped you and the public as a whole?

16. Do you think modern teclmology will create more jobs for the people in future in this area or Not? Yes 0 No D 17. If yes, how do you think it can do this?

42 18. Effects of modern technology on the level of employment in financial institutions of this area. (Tick in the appropriate box) The Effect of modern technology Agree Strongly Disagree St1·ongly Not Sure on the level of employment in Agree Disagree financial institutions. It causes a feeling of insecurity at work. It leads to indivisibilities It leads to Mass unemployment It continuously calls for new skills making old ones absolute

Please feel free other effects of modern technology on the level of employment in financial institutions.

43 19. Challenges facing modern technology in financial institutions of this area (Please tick in the appropriate box) Challenge facing modern Agree Strongly Disagree Strongly Not Sure technology in financial Agree Disagree institutions. Low level of intemet penetration and poorly developed telecommunication infrastructure Lack of a suitable legal and regulatory framework High rates of illiteracy Absence of strong financial networks High administrative costs Frequent power interruptions Cyber insecurity issues

Please feel free to write down other challenges facing modem technology m financial institutions.

44 20. Possible solutions to the challenges facing modern technology in financial institutions (Please tick in the appropriate box) Possible Solutions to the challenges Agree Strongly Disagree Strongly Not sure facing modern technology in financial Agree disagree institutions Facilitation of movement of various currencies Putting up a low that accommodates electronic contracts Getting involved in management of schools Though government policy of tax reduction Using Later adopter opportunities Through Liberalization and Privatization Effecting major barriers to competition __j

You are kindly requested to suggest other possible solutions to the challenges facing modern technology in financial institutions.

45 Questionnaire II: Respondents: Financial Institutions 1. Name of institution

2. Branch ......

3. What is level of technological growth in this institution? Low D Medium D High D

4. What level of qualifications in terms of technology do you expect from job applicants? Low D Medium D High D

5. What is the level of technological skills that most applicants posses? High D Medium D low D 6. How has modern technology improved the level of output of this institution?

7. Is there any opportunity for people with no technological skills to be employed in this financial institution? YesO No D If yes, specify

8. What (in your opinion) are the effects of modem technology on the level of employment in financial institutions? i) ...... ii) ...... iii) ......

9. What is the ratio of preference of manpower to machines?

46 I 0. What are the challenges modern technology 1s facing in this institution in relation to employment opportunities? i) ...... ii) ...... iii) ...... iv) ......

II. What do you think are the possible solutions to those challenges?

1......

11 ...... •...... •...... iii ......

IV ...... •...... •...... • v ......

47 APPENDIX II THE INTERVIEW GUIDE Questions. 1. How old are you? 2. Have you ever been interviewed before? 3. Are you married? 4. For how long have been working with this enterprise/ institution? 5. What is your position? (for bank officials) 6. How do you use the financial institutions in this area? 7. What do you think is the relationship between modern technology and the level of employment? 8. What are the effects of in modern technology on the level of employment in the financial institutions? 9. What challenges do you face with the existing modern technology? 10. What do you think are the possible solutions to the challenges faced by modern technology?

Thank you for your cooperation.

48 APPENDIX In RESEARCH BUDGET

The study was estimated to the cost of 500,000/= Item Cost Communication 90,000 Internet 25,000 Stationary 100,000 Photocopy 150,000 Printing and binding 100,000 Transport 100,000 Miscellaneous 35,000 Total 500,000

49 APPENDIX IV TIME FRAMEWORK

MONTH ACTIVITY JAN2 2011- FEB 2011 Proposal writing MARCH 2011-APRIL 2011 Preparation of the instruments and pre testing of the research instruments. MAY 2011- JUNE 2011 Data collection JULY2011 Research proposal writing AUGUST2011 Submission of the final research report

50 Ggaba Road, Kansaoga P.O. Box 20000 Kampala. Uganda Tel: +256 (0) 712 421256 Fax: +256 (0) 41 - 501974 E-mail: _\l~nlinl@kiu,ag.uga Website: !J!!e.:/lwww.kiu.ac,.t!J1

01"' August 2011

' ' Re: INTRODUCING MAGEf,f8EIVAN··-13EC{.l.0003t&~/!PU'

This is to Introduce to you the aho\fe i:(ampala ·International He. is carrying OIJt a research study on cc):iltttfEnlpfoym,~llltiJ::!Pil.Oic-till'ili~~-s·]i:ri<'f;iitaJl'cti:tl Institutions In Kampala.

You are requested to offer him the necessary assistance that Will enable him required d_ata so CIS to complete this research project;

"E.lJtloring the Heighrs"

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