BINDURA UNIVERSITY OF SCIENCE EDUCATION FACULTY OF COMMERCE DEPARTMENT OF ECONOMICS THE EFFECTS OF BOND NOTES ON PROCUREMENT: A CASE OF BINDURA UNIVERSITY OF SCIENCE EDUCATION CHIRIKURE SHUMIRAI (B1544541) A DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE BACHELOR OF COMMERCE HONOURS DEGREE IN PURCHASING AND SUPPLY OF BINDURA UNIVERSITY OF SCIENCE EDUCATION SUBMITTED IN APRIL 2018 APPROVAL FORM The undersigned certifies that they have supervised, read and recommended to Bindura University of Science Education for acceptance a research project entitled “The Effects of Bond Notes on Procurement: A Case of BUSE”, submitted by Shumirai Chirikure in partial fulfillment of the requirements of the Bachelor of Commerce (Honours) Degree in Purchasing and Supply. …………………………………………………………………………………/……/......../……… Signature of student Date Date ……………………….........................................................................…..……/……/……/............. Signature of Supervisor Date …………………………………………………………………………….……/……/……/........... Signature of the Chairperson Date …………………………………………………………………………….……/……./......./……... Signature of the Examiner (s) Date i RELEASE FORM Student Number: B1544541 Title of Project: The Effects of Bond Notes on Procurement: A Case of BUSE. Programme: Bachelor of Commerce (Honours) Degree in Purchasing and Supply Year Granted: 2018 Permission is hereby granted to Bindura University library to produce single copies of this project and to lend or sell such copies for scholarly or scientific research purposes only. The rights and neither the project nor extensive extracts from it may be printed or otherwise reproduced without the author's approval. SIGNED -------------------------------------------- Permanent address: 3114 Aerodrome, Bindura. Cell number: +263 773 559 793 ii DEDICATION To Tino, my one and only child and son, the sky is the limit. iii ABSTRACT The purpose of this study was to assess the effects of bond notes on BUSE procurement. The study was guided by three objectives which are: to examine the effects of bond notes on BUSE procurement; to establish the strategies used by BUSE to mitigate the effects of bond notes on procurement and finally to make recommendations for the challenges posed by bond notes on the procurement front. A case study research design was used and a purposive sample was made up of 10 BUSE employees and 10 local suppliers who were relevant to the study. Collection of data was done using close ended questionnaires where 10 questionnaires were distributed to the all 10 BUSE staff members. All of them were successfully answered and returned. The study adopted both qualitative and quantitative methodologies to analyse the data which was collected. The study found that bond notes posed negative effects on procurement such with disrupted procurement cycles, multi-tier pricing and over-pricing, compromised quality, substitutes, prolonged lead times and failure to secure deliveries. There was failure to secure bids, loss of buyer negotiation power and attractiveness. The research study also concluded that there was a change in procurement due to the introduction of bond notes which led to the shortage of foreign currency in an economy which relies heavily on imports due to lack of productivity. The research study recommended that government should inject United States Dollar into the market or fully dollarize or even adopt the South African Rand. The study has also recommended that the resources that BUSE have such as the farm should be maximized to obtain long term benefits such as producing own consumables. Key Words: Procurement, Bond notes, Multi-tier pricing. iv ACKNOWLEDGEMENTS My sincere thanks and special credit goes to my immediate supervisor Mr. Muchabaiwa, without his patience, guidance and continuous support, expertise and help, it would have not been easy to complete this study. Special thanks goes to Winnie, Charles and Natsikai, Moreblessings and Cratwell, you are wonderful people, without you guys I would not have made it. My gratitude and sincere appreciation goes to BUSE and their staff for granting me the opportunity to carry out the research and for provision of any material required for the research to be a success through professional responses from questionnaires. Local suppliers were very helpful and cooperative, responding to interviews freely and openly. v Table of contents BINDURA UNIVERSITY OF SCIENCE EDUCATION ........................................................................ i APPROVAL FORM ...................................................................................................................................... i RELEASE FORM ......................................................................................................................................... ii ABSTRACT ................................................................................................................................................. iv ACKNOWLEDGEMENTS .......................................................................................................................... v Table of contents .......................................................................................................................................... vi LIST OF TABLES PAGES ...................... ix LIST OF ABBREVIATIONS AND ACRONYMS .................................................................................... xii CHAPTER 1 ................................................................................................................................................. 1 THE PROBLEM STATEMENT .................................................................................................................. 1 1.0 Introduction ............................................................................................................................................. 1 1.1 Background to the study ......................................................................................................................... 1 1.3 The aim of the study ............................................................................................................................... 5 1.4 The research objectives ........................................................................................................................... 5 1.5 Research questions .................................................................................................................................. 5 1.6 Significance of the study: ........................................................................................................................ 6 1.6.1 To the government ............................................................................................................................... 6 1.6.2 To the organization .............................................................................................................................. 6 1.6.3 To BUSE .............................................................................................................................................. 6 1.6.4 To the researcher .................................................................................................................................. 7 1.6.5 To future researchers/other academics ................................................................................................. 7 1.7 Assumptions ............................................................................................................................................ 7 1.8 Delimitations of the study ....................................................................................................................... 8 1.9 Limitations .............................................................................................................................................. 8 1.9.1 Geographical location .......................................................................................................................... 8 1.9.2 The organizational structure................................................................................................................. 9 1.9.3 Time ..................................................................................................................................................... 9 1.9.4 Confidentiality ..................................................................................................................................... 9 1.10 Definition of terms .............................................................................................................................. 10 1.11 Chapter summary ................................................................................................................................ 11 vi CHAPTER 2 ............................................................................................................................................... 12 LITERATURE REVIEW ........................................................................................................................... 12 2.0 Introduction ........................................................................................................................................... 12 2.1 The Conceptual framework ................................................................................................................... 12 2.2 Theories of Money ...............................................................................................................................