An Assesment of Financial Practice as a Determinant of Growth of Savings and Credit Co-operative Societies Wealth in Kenya:The case of Meru County
Loading...
Date
2013-03-21
Authors
Olando, Clement ooko
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
Savings and Credit Co-operative Societies (SACCOs) in Kenya have been investing
over the years with the objective of maximizing their wealth. As is the case with all
investments, wealth maximization is a key objective whenever SACCOs have
chosen an investment avenue from a universe of possible investment vehicles.
Studies have shown that lack of sufficient Growth of SACCOs' Wealth has made it
difficult for them to absorb their operational losses, which has threatened their
sustainability. This has led to the losses being absorbed by members' savings and
share capital, hence lose of members' savings. While the purpose of SACCOs is to
mobilize m'~hJ:bers'funds and grant credit for the members' development, this has
made it difficult for the SACCOs to grow their wealth, achieve this objective and
contribute favorably to National Domestic Savings. This failure to build enough
SACCOs' wealth, through accumulation of institutional capital, is attributable to
weak financial stewardship, inappropriate capital structure and imprudent funds
allocation strategy. It is against this background that this study assesses the financial
practice as a determinant of growth of wealth of SACCOs with a view of
ameliorating the situation for socio-economic development. The specific objectives
were to; establish the association of financial stewardship and the growth of
SACCOs' wealth, establish the association of capital structure and the growth of
SACCOs' wealth, and establish the association of funds allocation strategy and the
growth of SACCOs' Wealth. This study used descriptive design in soliciting
information on the determinants of growth of SACCOs' wealth. Data was collected
from the census of 44 SACCCOs in Meru county using a questionnaire and
document review-tool, .and analyzed using both descriptive and inferential statistics.
The study findings indicatedthat Growth of SACCOs wealth depended on Financial
stewardship, Capital structure and Funds allocation strategy, The study further found
that SACCOs inadequately complied with their by-laws; incomes from investments
did not adequately cover their costs, The study recommends that SACCO should;
continuously review credit policies, establish irrecoverable loan provision policies,
develop staff recruitment policies, use appropriate financing mix. Other
recommendation is that the Government should review legal framework to ensure
that institutional capital is used to grow SACCOs wealth, This study will empower
SACCOs with knowledge to ensure their sustainability from within, hence support
vision 2030 by widening financial inclusion.