The effect of the adoption of corporate governance practices on the financial performance of SACCOS in the public sector in Nairobi North District

Abstract

SACCOs have been providing financial services to their members with little or no competition from other players in the financial market. However, the entry of other players in the financial market, targeting the same clientele that had been traditionally considered as the territory of SACCOs and introducing services and products especially tailor-made to out-compete SACCO products, coupled with the liberalization of the cooperative movement and the financial market at large, all have strained the performance of the SACCOs. In light of this, many SACCOs have implemented corporate governance measures and practices in an effort to improve their performance and make them more relevant in their business and better able to compete in the financial markets in which they operate. This study sought to analyze the effect of the adoption of these corporate governance practices on the financial performance of SACCOs. The research was based on public sector SACCOs in Nairobi North District, Kenya. The target population was the 44 SACCOs registered with the district cooperatives officer in Nairobi North District under the public sector. A sample of 39 respondents drawn from 13 SACCOs out of the 44 SACCOs registered in the public sector in Nairobi North District was taken for the study. Data was collected using a structured questionnaire and interview methods. The responses from cross-functional sample group was analyzed using descriptive statistical techniques in form of frequency distribution tables, percentages, paretto, and computer packages. The expected output was to establish whether the adoption of corporate governance practices has any relationship with the financial performance SACCOs, and therefore come up with recommendations that will help in the enforcement of these practices by the SACCO societies regulatory authority.