Strategic Objectives and Financial Performance of Deposit Taking Savings and Credit Co-Operative Societies in Nairobi City County, Kenya
Faith, Mbula Ngui
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Savings and Credit Cooperative Societies play a significant role in financial intermediation and are a key predictor of welfare development within the society. They translate to 48.55% of the gross national savings. Industry report indicates that Deposit Taking Savings and credit cooperative Societies (DT-SACCOs) membership growth stood at 3.6 million people in 2016 from 3.1 million in 2015. The gross loans during the year 2016 rose to Kshs 297.6 Billion from Kshs 258.18 Billion recorded in 2015. The total savings and deposits on the other hand increased to Kshs 272.56 Billion in 2016 from Kshs 237.44 Billion registered in the previous year. However the performance of the DT-SACCOs has been under immense threat from other financial institutions such as banks and microfinance institutions.Inspite of this empirical research examining the effect of the strategic objectives adopted by DT-SACCOs on their performance is minimal. The current study bridges the gap by investigating the influence of strategic objectives on the financial performance of DT-SACCOs in Nairobi City County, Kenya. The study specifically sought to determine the influence of; adoption of ICT systems, employee competency, marketing activities and effective leadership on their financial performance. The study further examined the moderating effect of capital adequacy requirements on the relationship between strategic objectives and financial performance of DT-SACCOs. The research was grounded on the dynamic capabilities theory, the agency theory, the resource-based view theory and efficient structure theory. The target population for the study comprised 47 DTSACCOs in Nairobi City County. The study employed a descriptive research design. Since the population is not large, the study adopted a census approach of all the 47 Finance Managers of DT-SACCOs in Nairobi City County. The research utilized primary and secondary method in the data collection process. The research utilized a semi-structured questionnaires that were self-administered and SASRA supervision reports. To enhance the internal consistency and validity of the research data, the study conducted a pilot study of 10 DT-SACCOs in Machakos County. The data collected was sorted, coded and input into the Statistical Package Social Sciences (SPSS V 23) for subsequent data analysis. The data was analyzed using descriptive and inferential statistics (multiple linear regression model).Data collected was presented using tables and figures.The study found that ICT system adoption, employee competence, marketing activities, effective leadership and capital adequacy requirement were significantly influencing financial performance of Deposit Taking SACCOs in Nairobi City County, Kenya.The study concluded that SACCOs benefited largely from the imposed capital adequacy regulations as it improves public confidence, provides safety for members‟ deposits, availability of operating capital and increases lending capacity thus improving the financial performance. The study further concluded there was a strong relationship between the study variables. The study recommended that DT-SACCOs to embrace the use of information technology in their operations by developing websites to market its products so as to boost customer base and financial.To continue strengthening DT-SACCOs in kenya, the study recommended that DT-SACCOs should maintain the adequate capital requirements.The study also recommended that the regulator to keep f periodic monitoring to ensure SACCOs adhere to laid down regulations.