MIDLANDS STATE UNIVERSITY

FACULTY OF COMMERCE

DEPARTMENT OF ACCOUNTING

AN EVALUATON OF THE EFFECTS OF INFLATION ON CAPITAL

BUDGETING: A CASE OF TELONE

BY

ISHEANESU KUDAKWASHE MUTUSVA

Supervisor: Mr. Shumba

A DESERTATION SUBMITTED IN PARTIAL FULFILLMENT TO THE

REQUIREMENTS OF THE AWARD OF A BACHELOR OF COMMERCE
ACCOUNTING HONOURS DEGREE OF MIDLANDS STATE UNIVERSITY

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APPROVAL FORM

The undersigned certify that they have supervised the student Isheanesu
Kudakwashe Mutusva, Registration Number R168276Z dissertation entitled:
An evaluation on the effects of inflation on capital budgeting at TelOne.
Submitted in partial fulfillment of the requirements of the Bachelor of
Commerce in Accounting Honours Degree (HACC) at the Midlands State
University.

…………………………....... ……………………………….

SUPERVISOR DATE

……………………………….. ……….………………………

CHAIRPERSON DATE

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 RELEASE FORM

Name of Author: Isheanesu K Mutusva

Title Of Project: An evaluation on the effects of

Inflation on capital budgeting at

TelOne.

Degree Title: Bachelor of Commerce in Accounting

Honours Degree

Year of research: 2019

Permission is hereby granted to Midlands State University Library to
produce Copies of this Dissertation and lend such copies for private,
scholarly or scientific research only. The researcher reserves other
publications rights and neither the dissertation nor exclusive extracts from
it may be printed or otherwise be reproduced without the Author’s
permission.

Signed: ………………………….

Date: …………………………

Residential Address: 4381/1 Mkoba 10, Gweru

Cell Number: +263 771 458 228

E-mail: ikdmutusva@gmail.com

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 DEDICATION

I dedicate this piece of work to my father and my hardworking mother Violet Mutusva. You

worked so hard to make this degree programme a success.

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 ACKNOWLEDGEMENTS

I would like to give gratitude to the Almighty for seeing me through this project. I would like

to thank my Supervisor Mr Shumba whose constant guidance, constructive criticism and

support helped me carry out this research. I also want to thank TelOne Gweru staff, notably

Mr Tshuma, Mr Mhlanga and Mr Dhlamini for providing me with the information required to

make my research a success. Thank you for supporting me during the compilation of this

project. Thank you all for the support, God bless you.

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 ABSTRACT

The study sought to investigate the effects of inflation on capital budgeting at TelOne. It is

the objective of this study to evaluate the effects of inflation on capital budgeting and

ascertain if the strategies being implemented are effective. Qualitative research design was

used in data collection and primary data was collected through questionnaires and interviews.

The population sample was drawn from the TelOne Gweru. The results show that the existing

strategies to overcome inflation are not very effective in the making of sound investment

decisions. Based on this, the study recommended that TelOne Gweru should implement other

strategies such as NPV, IRR and Discounted cash flows in trying to overcome inflation

troubles.

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 TABLE OF CONTENTS

Item Description Page

DECLARATION FORM
APPROVAL FORM
RELEASE FORM
DEDICATION
ACKNOWLEDGEMENTS
ABSTRACT
TABLE OF CONTENTS
LIST OF TABLES
LIST OF FIGURES
LIST OF APPENDICES

CHAPTER 1 1
GENERAL INTRODUCTION 1
1.0 Introduction 1
1.1 Background of the study 1
1.2 Statement of the problem 2
1.3 Main Research Question 3
1.4 Research Objectives 3
1.5 Research Questions 3
1.6 Delimitations of the study 3
1.7 Significance of the study 4
1.8 Limitations of the study 4
1.9 Assumptions 4
1.10 Definition of key terms 5
1.11 Chapter Summary 5

CHAPTER 2 6
LITERATURE REVIEW 6
2.0 Introduction 6
2.1.0 Current revenue collection strategies that are implemented by City of 6

Gweru
2.1.1 Water Disconnections 6
2.1.2 Use of Debt Collectors 7
2.1.3 Litigation Process 7
2.2.0 Challenges affecting City of Gweru revenue collection strategies 9
2.2.1 Management override of Controls 9
2.2.2 Economic Hardships and Disinvestment of Companies 10
2.2.3 Political Challenges 11
2.3.0 Effectiveness of revenue collection strategies in place on service delivery 13
2.3.1 Water Disconnections 13
2.3.2 Use of Debt Collectors 13
2.3.3 Litigation Process 14

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2.4 Other strategies that can be used by City of Gweru to enhance revenue 15

collection
2.4.1 Customer Interfaces 15
2.4.2 Online Payment Methods 16
2.4.3 Citizen Participation in the revenue collection 17
2.5 Chapter Summary 19

CHAPTER 3 20
RESEARCH METHODOLOGY 20
3.0 Introduction 20
3.1 Research Design 20
3.1.1 Qualitative Approach 20
3.2 Target Population 21
3.3 Sample 22
3.3.1 Judgmental Sampling 23
3.4 Sources of Data 23
3.4.1 Primary Sources 23
3.4.2 Secondary Sources 24
3.5 Research Instruments 24
3.5.1 Questionnaires 24
3.5.2 Likert Scale 25
3.6 Validity and Reliability 26
3.7 Data Analysis and Presentation 26
3.7.1 Data Presentation 26
3.7.2 Data Analysis 27
3.9 Ethical Considerations 27
3.9 Chapter Summary 27

CHAPTER 4 28
DATA PRESENTATION AND ANALYSIS 28
4.0 Introduction 28
4.1 Questionnaire response rate 28
4.2 Presentation and analysis of questionnaires 29
4.2.1 Water Disconnections 29
4.2.2 Use of debt collectors 31
4.2.3 Litigation process 32
4.3 Challenges faced by City of Gweru in revenue collection 33
4.3.1 Management override of controls 33
4.3.3 Economic hardships 35
4.3.3 Political Challenges 36
4.4 Effectiveness of current revenue collection strategies 37
4.4.1 Water Disconnections 37
4.4.2 Use of debt collectors 39
4.4.3 Litigation process 40
4.5 Other strategies that can be used to collect revenue 41
4.5.1 Customer interfaces 41
4.5.2 Online payment methods 42

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4.5.3 Citizen participation 43
4.6 Any other contributions 44
4.7 What are the revenue collection strategies implemented by City of Gweru 44
4.8 What are the challenges faced by City of Gweru in revenue collection 45
4.9 How effective are the current revenue collection strategies 45
4.10 What other strategies can be used to collect revenue 45
4.11 Chapter Summary 45

CHAPTER 5 46
SUMMARY, CONCLUSION AND RECOMMENDATIONS 46
5.0 Introduction 46
5.1 Summary of chapters 46
5.2 Major research findings 47
5.3 Recommendations 47
Reference list 48

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 LIST OF TABLES

Description Page
Table 1.1 Statistics showing budgeted income and expenditure for City of Gweru 2
Table 3.1 Population and sample size 22
Table 3.2 Likert scale 25
Table 4.1 Questionnaire response rate 29
Table 4.2 Response to revenue collection by way of water disconnections 29
Table 4.3 Response to revenue collection by use of debt collectors 31
Table 4.4 Response to revenue collection by the litigation process 32
Table 4.5 Response to management override of controls as a challenge faced in 33

revenue collection by City of Gweru

Table 4.6 Response to challenges hindering revenue collection by looking at 35

economic hardships
Table 4.7 Response to challenges hindering revenue collection by looking at 36

political challenges
Table 4.8 Response to effectiveness of water disconnections 37
Table 4.9 Response to effectiveness of use of debt collectors 39
Table 4.10 Response to effectiveness of the litigation process 40
Table 4.11 Response to customer interfaces as another revenue collection strategy 41
Table 4.12 Response to online payment methods as another revenue collection 42

strategy
Table 4.13 Response to citizen participation as another revenue collection strategy

LIST OF APPENDICES

Description Page
Appendix I Approval letter
Appendix II Questionnaire
Appendix III Interview Guide

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 LIST OF FIGURES

Description Page
Figure 4.1 Response to revenue collection by use of water disconnections 40
Figure 4.2 Response to challenges faced in form of management override of 44

controls
Figure 4.3 Response to the effectiveness of water disconnections 48

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