The challenges of budgetary practices among savings and credit cooperative societies in Kenya

Abstract

The study had two objectives. The first objective was to examine the budgetary practices of Savings and Credit Cooperative Societies in Kenya. Secondly, the study sought to determine the challenges of budgeting in Savings and Credit Cooperative Societies in Kenya. This research was a descriptive survey study. From a population of 1,200 registered savings and credit Cooperative Societies (SACCOs) in Nairobi, a sample size of 40 SACCOs was selected using a simple random sampling method. Primary data was collected using a semi-structured questionnaire. Descriptive statistics especially percentages were used to establish the budgetary process used by the SACCOs. The results were presented using tables, graphs and charts for ease of understanding. The study found that budgets in SACCOs serve to aid control, aid both short and long term planning, communicate plans, and coordinate activities and also to evaluate performance. Majority of SACCOs used a combination of both top-down and bottom-up approach when preparing budgets. The SACCOs prepare annual budgets covering 12 months. Majority of SACCOs involve the heads of various departments, managing directors and administrative heads. Majority of SACCOs also set specific benchmarks as a combination of monetary value and percentages. Most of the SACCOs also review their budgetary planning and control procedures and changes such as format and time are made during such reviews. The challenges include unqualified personnel who form part of the budgetary committees not being up to the task hence poor budgets made in the ix process, insufficient budgets, bureaucracy in procurement procedures, and poor budget implementation. The study recommends that all stakeholders, including the employees and members need to be involved in the budgetary process. The study also recommends that the committee members be trained on budgeting issues as it was noted that some of them are not qualified yet they are relied on for budgeting in the SACCOs.