A study of determinants of growth of rotating savings and credit associations: the case of Kiserian location in Ng'ong division, Kenya
Rotating Savings and Credit Associations (RoSCAs) facilitate the mediation of funds by encouraging collective small scale capital accumulation in ways that keep local capital accumulation in circulation, provided that participants immediately apply the fund. The RoSCA movement in Kiserian Location has been growing in terms of increase in membership and number of groups. Despite this growth, there have been fluctuations in the financial turnover of RoSCAs which has affected the overall stability of growth in RoSCAs in the area. The general objective of the study was to analyse the determinants of RoSCA growth in Kiserian Location. Previous studies on RoSCAs have focused on economic efficiency of RoSCAs, types of RoSCAs and RoSCA participation theories. The determinants of RoSCA growth have not been systematically analysed, even though such analysis is important in facilitating growth and sustainability of RoSCAs. This study employed a descriptive research design that aimed at describing the characteristics of RoSCA members and analysing the determinants of RoSCA growth in Kiserian location. The target population was 50 RoSCA groups with a total population of 1246 members. Random sampling and proportional allocation methods were used to select a sample size of 293 members. Primary data was collected using a questionnaire which aimed at obtaining information on characteristics of RoSCA members and determinants of RoSCA growth. Secondary data was obtained from textbooks, journals, internet material and RoSCA records which included membership registers, contribution files and loan reports. Correlation analysis was used to determine the degree of relationship between the dependent variable (RoSCA growth) and the independent variables (member level of income, membership, contribution, default rate and interest income).Findings from the analysis revealed that member contribution, monthly income and membership were the most significant determinants of RoSCAs growth with positive correlation coefficients of 0.683, 0.641 and 0.327 respectively. The researcher concluded that growth of RoSCAs in Kiserian Location was determined by members' level of income, membership and amount of contributions. The study recommended that in order to accelerate RoSCA growth in Kiserian Location, members should boost up their contributions, the government should set up development projects for members which will increase their level of income and hence increase RoSCA growth, non RoSCA members should join these association so as to build a strong institution, and RoSCA groups should charge interest on loans which will generate more revenue in terms of interest income that will form a base for lending and hence increase the financial turnover of RoSCAs in the location.