Operational Strategies and Performance of Deposit Taking Savings and Credit Cooperatives in Kiambu County, Kenya

Abstract

Notwithstanding the increasing popularity of the Savings and credit cooperative societies, there have been tremendous challenges that have crippled most Savings and credit cooperative societies with some being forced to close down. Not only are these challenges arising from competition from banks and Micro-finance institutions, some of the challenges arise from the way its operations are being handled. Further, it raises the question as to the effectiveness of the operational strategies. This study assessed the effect of operational strategies on performance of Deposit taking SACCOS in Kiambu County, Kenya. The research’s general objective was to investigate the effectiveness of operational strategies on performance of SACCOS in Kiambu County, Kenya. The specific objectives were; To establish the effect of Process based strategies on the performance of SACCOS in Kiambu County, To assess the influence of quality based strategies on the performance of SACCOS in Kiambu County, To determine the impact of cost based strategies on the performance of SACCOS in Kenya and To evaluate the effect of time based strategies on the performance of SACCOS in Kiambu county. The study was premised on the Resource Based Theory and Porters Generic Strategies. The study covered 42 deposit taking SACCOS in Kiambu County regulated under SASSRA. The assessment utilized a descriptive research design and the populace was 2,312 staff of SACCOS in Kiambu County who include top and middle-level managers alongside supervisors. The sample was 233 employees of deposit taking Saccos in Kiambu County. A stratified random sampling technique was adopted. Data collection was done using close ended questionnaires. The reliability and validity of the instrument used in research were done with Cronbach’s alpha of 0.7 being obtained hence confirming the reliability of research instrument. The descriptive statistics was carried to show the mean and standard deviations. A regression analysis was carried. Diagnostic tests including correlation test, multicollinearity, normality and heteroscedasticity test were carried out. Presentation of outcome was done using the tables, charts and figures. In every stage of the research, ethical standards were adhered to. The outcome from the study showed that processed based strategies, quality based strategies, cost based strategies and time based strategies had a positive, significant effect on SACCOs performance. The p values were 0.004, 0.00, 0.00 and 0.019 correspondingly with positive regression coefficients. The researcher recommends that the SACCOs should embrace process based strategies specifically; in loan application processes, loan appraisal processes, operational risk management processes and the customer care processes. Secondly, the researcher recommends that SACCOs should direct their efforts in enhancing the quality based strategies particularly on continuous improvements and error reductions. Thirdly, the researcher recommends that SACCOs in Kiambu County should put more emphasis on the cost based strategies specifically those that will help in reducing the operational costs, insurance costs, payroll costs and other related costs. Finally, based on the results, the researcher recommends that SACCOs in Kiambu County, should embrace time based strategies specifically strategies that aim at improving the turnaround time or the lead time in its processes. It is recommended that research in future needs to be done on the application of the operational strategies in other financial institutions especially the microfinance institutions and the banks.