Principles and Practice of Communication

Exam Year:2013

The Kenya National Examinations Council

Diploma in Banking Part I
3 hours

Answer ALL the questions in both sections.

SECTION A (32 marks)
Answer ALL the questions in this section in the spaces provided after each question.
1. Outline four ways in which effective communication is useful to an organization. (4 marks)

2. List four types of noise that may interfere with the message during the process of communication. (4 marks)
3. State three advantages of appropriate grooming for a bank officer. (3 marks)

4. Outline three ways through which grapevine communication can be minimized in a bank. (3 marks)

5. List four types of written communication that may be used to convey messages in a bank. (4 marks)
6. Outline four reasons that have led to the storage of information in computers by many organizations. (4 marks)

4. Outline three ways through which grapevine communication can be minimized in a bank.(3 marks)

5. List four types of written communication that may be used to convey messages in a bank. (4 marks)

6. Outline four reasons that have led to the storage of information in computers by many organizations. (4 marks)

SECTION B (68 marks)
Answer ALL the questions in this section in the space provided after question 13.
10. Mwanzo Bank Limited will be holding an end of year party in a month”s time. As the secretary of the organizing committee, write a memo to all staff members inviting them to the party and
giving details of the major events for the day. (16 marks)
11. (a) Maua Bank Limited intends to hold an international conference for bankers. As the Public Relations Officer at the bank, highlight the preparations that you would make in
order to ensure that the conference is held successfully. (8 marks)
(b) Explain five consequences of poor downward communication in a organization. (10 marks)
12. In about 250 words, write an essay on “The Importance of Banks to the Kenyan Economy”. (16 marks)
13. Read the following passage and then answer the questions that follow.
It is unfortunate that a majority of Kenyans presently engaged in gainful employment and other income generating activities could sink into poverty when they retire. While only small percentage of
those in formal employment have some form of retirement savings plan, many people – especially those in the informal sector as well as low-income earners in the formal sector – have none.

In the traditional set-up, there were informal but reliable methods of support for the aged such as the extended family, community support, social culture and even taboos. Howeve due to the changing social fabric of Kenya, and indeed most countries in Africa, such traditional forms of support can no longer be relied upon by retirees in old age. With the impact of urbanization, the breakdown of extended families and cultural values and the RIV/AIDS pandemic, most informal support systems are being
stretched beyond breaking point or even crumbling. This suggests that informal family support systems cannot be relied upon as a means of keeping the elderly out of poverty.

Formal sector employment in Kenya is growing more slowly that the informal sector. Twenty years ago, 80 per cent of employment was in the formal section. Today, the reverse is true with 80 per
cent of employment being in the informal sector. This means that measures must be taken, to extend pension coverage to Kenyans in the informal sector and the rural economy to avoid old age poverty.

The Retirement Benefits Authority (RBA) has embarked on an aggressive public education campaign to sensitise Kenyans on the need to plan and make provision for retirement. For many workers
in Kenya, as in other low income countries, needs such as housing, education and health care tend to be regarded as more important than saving for pension. Nevertheless, there are a number of behavioral obstacles to saving for retirement even when there is a surplus. Such obstacles include delays in implementing saving plans and lack of foresight. These hindrances support the case for
introducing compulsory contribution to a pension scheme for all formal sector employees.

There are a number of reasons why a majority of Kenyans, both in formal and informal sectors, have no retirement savings plan. Under the present system, the National Social Security Fund (NSSF) and the public service scheme cover about 76 per cent, in aggregate, of the formal sector employment. This accounts for only 16 per cent of the total recorded employment. Occupational pension schemes, whose members also contribute to the NSSF, cover only 3.4 per cent of total recorded employment. This
leaves a large number of workers who are not covered ”under any scheme. It is the low income informal sector workers and the lifetime poor that have virtually no cover other than reliance on inter-generation financial and non-financial support.

With a severe economic environment prevailing in the country which in a weak shilling and expensive credit, those accessing their pension benefits at the moment are among the worst hit. The Nairobi Securities Exchange (NSE) index has recently declined by more than 35 per cent while there has been a rise in interest rates. In as much as monthly inflation has the last few months, it is still above the 10 per cent range; a level that is still too high high.

For a while now, stakeholders in the pension industry have been toying with the idea of introducing a mandatory pension scheme for all Kenyans who are not in an pension scheme. It is expected that the new scheme will provide a comfortable life at old age. The is also need to revise
monthly contributions upwards for current contributors to NSSF. At present, the level of contributions to the NSSF is a maximum of Ksh. 400 per month. This translates to 1.3 per cent of average earnings in Kenya, which is considered not sufficient to provide any reasonable measure of income replacement upon retirement.

It is commendable that the government and other stake holders are putting in place mechanisms
to take care of citizens at old age. However, it is important for Kenyans to re-evaluate their priorities and make individual retirement plans to ensure that they are comfortable in old age.
Adapted from “The Financial Journal”; The Standard, 7 February 2012.
(a) In about 100 words, and according to the passage, explain the measures that should be taken to prevent old age poverty among Kenyans. (6 marks)
(b) In about 150 words, and according to the passage, explain why Kenyans engaged in gainful employment and other income generating activities may sink into poverty when
they retire. (12 marks)



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