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All about starting, rebranding, and or running a successful sacco.
The Savings and Credit Cooperative Societies (SACCOS) are financial institutions in the line of cooperatives societies that aims to meet common needs of the members through savings mobilization, loans and financial advisory services. They enhance economic growth and development by availing funds to members so as to engage in viable business ventures. Despite this contribution, SACCOs have not been able to perform effectively in Kenya due to financial instability in their operations. Therefore, the researcher felt the need to investigate the determinants of financial performance of Saccos in Nakuru Town, Kenya. The objectives of the research study were based on; membership size, frequency of supervision and employment management practices. It was further guided by theories; organizational theory and trade-off theory. Descriptive survey research design was employed and helped in detailed capture of important information for the study. Census technique was used to include all Managers of 32 SACCOs in Nakurutown who provided data through structured questionnaires. Inferential and descriptive statistical methods incorporated means, standard errors, correlation coefficients and regression coefficients to analyze the data. The study findings showed that membership size affected financial performance of SACCOs. The correlation between the membership size and financial performance was positive and statistically significant (r=0.564; p<0.001). The employment management practices were found to affect financial performance as expenditure was 35.8% lower (P< 0.1) within the budgeted estimates.SACCOs are recommended to improve their service delivery to attract more potential members and still keep the existing ones. The researcher further recommends better alignment of employment management practices to organization structure to make them more relevant as they play key role in financial performance.This research work will benefit the Saccos through encouraging them to engage in practices that can lead to financial stability in their organizations. As such, they will be able to deal with obstacles that hinder their service delivery to their members.
CORPORATE GOVERNANCE IN DEPOSIT TAKING SACCOS: RETHINKING THE LEGAL FRAMEWORK TO ADDRESS THE MISMANAGEMENT OF SACCOS BY DIRECTORS
CORPORATE GOVERNANCE IN DEPOSIT TAKING SACCOS: RETHINKING THE LEGAL FRAMEWORK TO ADDRESS THE MISMANAGEMENT OF SACCOS BY DIRECTORS2017 •
Over the years, Saccos have gained popularity all over the world as an alternative to banks. The benefits of Saccos cannot be underestimated. They offer better terms for loans, promote a culture of saving and give substantial dividends at the end of the year. In addition, Saccos being financial cooperatives, are governed by the principles of cooperatives key among them autonomy and democratic member participation. As such, unlike banks which are customer based, Saccos are member based and the members have the power to control the affairs of the Sacco. However, Saccos have been facing the problem of mismanagement by directors who act as agents of the members in the management of the affairs of the Saccos. Various laws have been enacted to solve this issue of mismanagement among them the Cooperative Societies Act and Sacco Societies Act. However, despite the enactment of these laws, the problem of mismanagement still continues. To identify the causes of this mismanagement, this paper has analysed the existing laws on management of Saccos and identified loopholes therein. It has also looked into the operations of enforcement institutions as well as cases that demonstrate disputes relating to bad corporate governance. This research reveals that the current laws, though quite progressive have failed to comprehensively address issues of corporate governance and role of directors as managers of Saccos. The provisions lack the specificity, certainty and strictness necessary to uphold corporate governance in Saccos. In addition, the study compares the legal framework of Kenya with that of Australia keen to note any differences which if introduced in Kenya would solve this problem. The study recommends that guidelines made by SASRA as the regulator for Saccos ought to be binding. It also suggests that directors should undergo continuous learning so as to improve their managerial skills. Further, Kenya should consider the option of consolidating the legal framework for all financial institutions to ensure high standards of governance similar to Australia.
Cooperative management in a savings and credit cooperative (SACCO) is a strategic process comprising of savings mobilization, credit administration and member relationships management. The aspects enable SACCOs to achieve a competitive advantage by facilitating them meet needs of members and to leverage on the strength of membership. Therefore, sustainable performance could be an outcome of savings mobilization, credit administration and the members " relationship with each other and with the cooperative. However, most cooperatives have had unsustainable performance and low survival rate due to inadequate information on the influence of cooperative management on sustainable performance. Thus, the specific objective of the study was to establish the influence of cooperative management on sustainable performance, by examining SACCO management in terms savings mobilization, credit administration and member relationships management. The study was an explanatory cross-sectional survey targeting all the deposit taking SACCOs in Kenya. From the descriptive analysis, 71.45% of the respondents agreed that cooperative management positively influence sustainable performance of Saccos. Further, the predictor variable was found positively correlated with sustainable performance of Saccos at 77.3% and to explain 79.4% of variation (i.e. R 2) in SACCOs " performance. Likewise, the regression results revealed that governance had a significant positive coefficient (B= 0.213, p =0.000) which imply that a unit change in management would enhance sustainable performance of SACCOs by 0.213 units. The study then recommends that SACCOs should improve on strategic management by ensuring strategic decisions are aligned to strategic actions. This will reduce the disconnect between strategy formulation and execution leading to improved competitive advantage of Saccos and fulfilment of their strategic purpose, mission and vision.
Financial development is playing an important role in Tanzania’s economic progress. Financial failures, particularly insufficient institutions and high transactions costs limit poor people’s access to formal finance and prevent low income of people from borrowing, and saving. In this essay the importance of mobilizing savings through providing low-income to people from financial services in Tanzania is emphasized. Last decade of microfinance practice, particularly in Tanzania, has neglected rural finance. Support to the sector has concentrated on turning credit progammes into suitable microfinance institutions (MFIs). This emphasis has produced a small number of MFIs that have either achieved financial sustainability or are close to achieving this. In Tanzania this includes organizations such as SELF, PRIDE, MEDA. SACCOs, Savings and Credit Cooperative Societies as an alternative to formal banks are discussed as a way to increase savings. Furthermore, SACCOs –Members preferences are studied. Developing and improving occupational SACCOs, saving and credit cooperatives, can be effective alternative to formal banks. The safety-issue is the basic problem, where education plays an important role to improve security. With improvements SACCOs could in the long run function as a way to connect informal savings with the formal financial sector. Finally, it is imperative for the formulation of an appropriate MFIs policy which should reflect the views and aspirations of MFIs and also aim at improving business culture, promote trust, transparency, accountability and good governance, considered as hallmarks for building a strong MFIs sector.
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THE ROLE OF INFORMAL MICROFINANCE INSTITUTIONS IN SAVING MOBILIZATION, INVESTMENT AND POVERTY REDUCTION. A CASE OF SAVINGS …ABSTRACT The Savings and Credit Cooperative Societies (SACCOS) are financial cooperatives that aim at meeting the financial needs of all members men/women, old/young, rich/poor in particular, by encouraging savings and granting loans to the members. It belongs to its members who manage it democratically. They play important role in socioeconomic development of members and communities in general as SACCOS enable easy access to financial services to people, encourage savings, create employment opportunities, support directly community development effort like helping community access to social services, stimulate growth of business, and improve members' income as well as living conditions. If SACCOS are managed properly, it becomes possible to play such social and economic roles to the members and have spiral effects to the community development process. As a result, they will be able to achieve the social and economic expectations of members. However for some SACCOS as they proceed with their operations, they face various obstacles which prevent them from fulfilling the visions/expectations that people (members) and community at large. Therefore the aim of this paper was to analyse the internal and external factors that hinder SACCOS to achieve the expectations of their members. The descriptive design was used and the data used were mostly secondary being collected from various already documented reports, papers, researches and journals, and in some circumstances, primary data were used. The approach used in describing the findings was mostly qualitative. The paper revealed that the factors preventing SACCOS to meet members' expectations are both internal and external. Internal factors are like; financial constraints, poor loan recovery, governance problems, lack of common interests, high interest rates on loans by some SACCOS, weak leadership and institutional capacity, uninformed membership, inadequate education and training, limited range of financial products and poor quality services, poor accounting and record keeping, misuse of funds and non adherence to cooperative principles. The internal factors identified include; competition, negative impacts of external financing, weak assistance form SACCOS supporting institutions, insufficient auditing and inspection, political interference and excessive donor dependency. It was recommended that to overcome these challenges and meet members' expectations, there is a need to; promote SACCOS good governance practices, provide education and training, diversifying sources, increasing capacity and number of cooperative banks, ensure proper financial management and better accounting practices, keeping records properly and networking of the SACCOS.
Financial intermediation is an exciting field in the demand and supply of funds for investment, liquidity and consumption purposes. Through financial intermediation economic growth occurs and the improvement of the welfare improves: Funds are routed from the savers to borrowers who use the funds in most profitable economic activities (King and Levine 1993).The cooperative movement has been in existence since pre-independence times, they have been touted as the major ways of economic empowerment and poverty reduction. The growth of Saccos has been tremendous and thus they are now in the vision 2030 blueprint as one of the mobilizes of savings and investments.
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