Major factors that affect the cashflows of SACCO societies in Kiambu District

Abstract

This study assessed the factors that affect the cashflow of SACCO societies in Kiambu District. Due to the cash flow problem, SACCOs are not able to serve their members properly and as a result the members have moved to seek credit from other alternative credit providers. The main objective of the study was to establish the factors that affect the cashflow of the various categories of SACCO societies and recommend ways of arresting this problem. Literature review covered work already done on SACCO societies and in particular relating to cashflow. The dependent variable was the cashflow while the independent variables were: non-remittance of SACCO dues, increasing operation costs, payment of an increasing dividend payout ratio, competition from other credit providers and investment policies employed by the SACCOs. Stratified random sampling was used to create a sample of 27 SACCOs out of the 80 SACCOs in the population being studied. All the different categories of SACCOs were represented in the sample. Data was collected by means of a structured questionnaire supplemented with some interview to make the questions clear. Data was analysed using descriptive statistics and in particular frequency tables, pie charts and bar graphs were used. The findings were that SACCO cashflows are affected by competition caused by commercial banks and microfinance institutions, continued payment of an increasing dividend payout ratio, increasing operation costs and little or no member education. The recommendations were that SACCOs should improve on education to members and staff by increasing the number of education days and funding, monitor the competition strategy of their competitors and adjust in time, change to pure residue dividend payout policy and increase the use of computers to reduce the cost of operations.