Investment appraisal and risk analysis by Tanzanian pension fund institutions

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University of Dar es Salaam
The general objective of the study was to understand how pension fund institutions in Tanzania appraise and analyze risk in the projects investment. Specifically, the study sought to; analyze various investment appraisal techniques used by pension fund institutions, investigate methods used to identify and analyze the investment and risk and examine the incorporation of risk in investment decision of the pension fund institutions. The study also determined the factors influencing the investment decision making in pension funds and investigated factors that account for differences in investment appraisal and risk analysis across the different pension schemes. The study involved four pension funds institutions which are NSSF, PPF, PSPF and LAPF. Qualitative and quantitative research approaches were used to collect data. Interviews and documentary review were used during data collection and were affected through the use of instruments such as interviews and questionnaires. Findings indicated that Tanzanian pension funds do use NPV, IRR, PB and ROI techniques in appraising investment projects. Among techniques used, IRR was found to be most applicable techniques followed by NPV and PB. Subjective/judgmental, sensitivity analysis, payback period and ratio analysis methods were used to incorporate risks in investment decision. In general Tanzanians pension funds use a combination of investment appraisal techniques but they do pay much attention on discounted cash flow (DCF) methods. The finding reveals that Tanzanian pension funds are risk averse as they avoid taking higher risk investments. Policy was also found to be a constraint in choosing area of investment.
Available in print form, EAF collection, Dr. Wilbert Chagula Library, class mark ( THS EAF HG4529.N54 )
Investment analysis, Risk analysis, Pension fund
Njeza, Z.O ( 2005 ) Investment appraisal and risk analysis by Tanzanian pension fund institutions, Masters dissertation, University of Dar es Salaam, Dar es Salaam.