Corporate Governance and Performance of Savings and Credit Cooperative Societies in Kilifi County, Kenya
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Date
2019
Authors
Ahmed, A. F.
Rugami, M.
Journal Title
Journal ISSN
Volume Title
Publisher
International Academic Journals
Abstract
The SACCO sector is becoming
increasingly important in Kenya. This
sector is a key player in the economy,
controlling about 43 per cent of Kenya’s
gross domestic product therefore called for
an investigation into the effect of corporate
governance on the on performance of
SACCOs in Kenya. The total assets in the
Kenya’s SACCO sector increased to
K.sh.248 billion from K.sh. 216 billion in
2010. Cross-cutting issues affecting
performance of SACCOs in Kenya include
governance, inadequate human resource,
weak regulations and supervision, limited
products and services, low marketing,
innovation and poor image. The other
challenges have been low capitalization,
poor information technology, and high
taxation, lack of financial standards,
HIV/AIDS and non-remittance of
deductions by employers in addition there
are inadequate research findings on how and
to what extent these factors influence the
performance of the SACCOs in Kenya. The
general objective of the study was to
establish the influence of corporate
governance on performance of SACCOs in
Kilifi County. The specific objectives of the
study were to establish the influence of
board composition, size of the board, board
members qualification and gender balance
of the board members on the performance of
SACCOs in Kilifi county. The study was
anchored on two theories which include
agency theory and stakeholders’ theory. The
study used descriptive research design. The
target population for the study was 200
respondents from the 40 SACCOs with
offices in seven sub-counties of Kilifi
County. The study used purposive sampling
technique to select only 30 SACCOs which
are registered, operational and have their
records with the Directorate of Cooperative
in Kilifi County with each 5 board members
making the sample size of 150 respondents.
The researcher used a semi-structured
questionnaire administered to each member
of the sample population. The researcher
carried out a pilot study to pretest and
validate the questionnaire. Quantitative data
collected was analyzed by the use of
descriptive and inferential statistics using
SPSS. The analysed data was presented in
graphs, frequencies, charts and tables for
interpretation and to enable draw
conclusions and recommendations thereof.
The study established that corporate
governance was a significant factor in
determining performance of the performance
of the SACCOs in Kilifi County. The study
concluded that the boards of directors
among the SACCOs in Kilifi County were
moderately representative, diverse,
professional and qualified. The study further
concluded that lean or small board size but
professional and qualified contributed
positively and significantly to the
performance of the SACCOs due to their
efficiency and effectiveness in decision
making, management, communication,
coordination, monitoring and in operation
cost. The study concluded that the board
members among the SACCOs in Kilifi
County have the necessary knowledge,
skills, experience and ideas to improve the
performance of the firms. The study further
recommended that SACCOs in Kilifi
County didn’t have gender balance among their boards with the male gender
dominating. The female gender was not
fairly represented and delegated leadership
roles. However there was at least a female
board member among the SACCOs included
in the study. The study recommends that the
SACCOs need to ensure that the boards are
representative, diverse, professional and
qualified. The study recommends that lean
or small board size but professional and
qualified should be embraced among the
SACCOs due to their efficiency and
effectiveness in decision making,
management, communication, coordination,
monitoring and in operation cost.
Description
A research article published in International Academic Journal of Economics and Finance
Keywords
corporate governance, performance, savings and credit cooperative societies, Kilifi County, Kenya
Citation
: Ahmed, A. F. & Rugami, M. (2019). Corporate governance and performance of savings and credit cooperative societies in Kilifi County, Kenya. International Academic Journal of Economics and Finance, 3(3), 61-79