Corporate governance practices and performance at Elimu Sacco in Kenya

Abstract

Previous research has shown that corporate governance in Sacco’s in Kenya has not been effectively regulated and supervised. It is important to emphasize that good corporate governance practices in the SACCOs is imperative if the cooperative movement is to effectively play a key role in the overall development in Kenya. This study sought to achieve two objectives: To find out the influence of corporate governance practices on the performance of Elimu SACCO and to establish the challenges facing corporate governance practises at Elimu SACCO. The study used both primary and secondary data. Primary data was collected using an interview guide that had open-ended questions which enabled the researcher to collect qualitative data. The respondents of the study were ten (10) managers drawn from the various departments at Elimu SACCO. The study findings indicated that the main tasks of corporate governance involved assuring corporate efficiency and mitigating arising conflicts, providing for transparency and legitimacy of corporate activity, lowering risk for investments and providing high returns for investors and delivering framework for managerial accountability. Further, findings showed that corporate governance at Elimu SACCO encompassed authority, accountability, stewardship, leadership, direction and control exercised within an organization. The study concluded that the corporate governance helped in defining the relation between the SACCO and its general environment, the social and political systems in which it operates and also linked the way management and control were organized thus affecting the performance of the SACCO and its long run competitiveness. The study recommends that Elimu SACCO should maintain a smaller board size that facilitates performance of the SACCO. However, the management should ensure that the board size is optimal as a very small board can also be redundant and may not be efficient in governing the SACCO. The study further recommends that Elimu SACCO be well equipped to implement corporate governance practices in its daily activities to the levels which might be acceptable in developed market economies and improve accessibility to firm financing by enhancing transparency and accountability in the information disclosed.