FACTORS AFFECTING FINANCIAL GROWTH OF SAVINGS AND CREDIT CO-OPERATIVE SOCIETIES IN KENYA: A CASE STUDY OF KILIFI COUNTY

Abstract

While the main function of SACCOS is to mobilize members’ savings and grant them credit for their growth and development, it has been hard for the SACCOS to achieve this objective due to weak financial policies and controls. This therefore necessitated the study. The research was therefore carried out with an aim of establishing the factors affecting financial growth of SACCOS in Kilifi County. The following specific objectives were addressed. To establish whether loan defaulting affect the financial growth of SACCOS’ in Kilifi County. To determine whether membership size affect financial growth of SACCOS’ in Kilifi County. Examine how operating costs influences the financial growth of SACCOS’ in Kilifi County and to investigate whether dividend policy affect financial growth of SACCO's in Kilifi County. Targeted population were active registered SACCOS of Kilifi County. Descriptive design was used in presenting information and stratified random sampling was used in coming up with the sample size. Primary information was gathered by use of a likert scale questionnaire. Data was collected from employees of the sampled SACCOS using questionnaires comprising of open and closed ended questions. Secondary data collection sheet was used to collect the secondary information regarding SACCOS’ performance from the audited financial reports of the sampled SACCOS. Variables used were loan default, operating costs, dividend policy and membership size. Statistical package for social sciences (SPSS) version 21 was used to sort, code and input information for the production of graphs, tables and descriptive statistics. Out of the 90 questionnaires, 12 were incomplete while 6 were rejects. This made the working to be based on the remaining 72 questionnaires from the SACCOS’ that were responsive giving a response rate of 80%. Male respondents made the majority with 45 xiv respondents who were rated at 62.5%. Female respondents were rated at 37.5% with a representation of 27 respondents. Results showed that 79.17% of the SACCOS agreed that loan defaulting was rampant among their members and it has indeed affected financial performance. 68.25% of the respondents agreed that dividend policy affects financial growths of SACCOS. 65.2% agreed that operating cost influences the financial growth of SACCOS and 67% agreed that membership size influences financial growth of the SACCOS in Kilifi County. The researcher recommended that SACCO’s need to be strategically placed in making follow-up on loans before they become default. This will ensure reduced losses incurred in the form of default loans. Also management of dividends should remain policy guided. This will ensure there are maximum benefits of the SACCOS from the dividends and ultimately impact positively on the financial growth of the institutions. Operation costs should be minimized at all costs since they cannot be avoided. Membership size should be apriority for every SACCO since financial stability and growth is dependent on the membership size.The researcher concluded that loan default, dividend policy, operating cost and membership size greatly influences financial growth of the SACCOS in Kilifi County.