The Contribution of Saccos in Enhancing Household Livelihoods Among Members in Bungoma County, Western Kenya

Abstract

Despite the opportunities offered by Saccos to individuals to participate in economic development, the researcher is not aware of any study that has documented the extent to which Saccos contribute towards enhancing household livelihoods through financial inclusion – a question that the present study sought to answer. The study was guided by four objectives—to identify factors making Saccos attractive savings mobilization vehicles; to establish the contribution of education and training on proper utilization of loans; to examine the forms of utilization of Sacco loans at the household level; and, to assess the extent to which households use Sacco services to enhance livelihoods. The study utilised 196 participants—half of whom were members of Saccos in Bungoma while the other half were non-Sacco Participants to provide an alternative view. The study employed a stratified random sampling strategy to select participants. To answer, the study question, a questionnaire, and an interview schedule were utilized to triangulate the sources of data. Validity of the research instrument was assured by two experts from Nairobi University while reliability was determined through a pilot study using the test-re-test study techniques. A two weeks-interval was given before the second administration of the questionnaire. After fine tuning the instruments, data collection was undertaken between the months of July and August, 2018. Data were analysed mainly using descriptive statistics by the help of statistical package for social sciences (SPSS) version 25. However, qualitative data was analysed thematic. The results of the study showed that both Sacco-member participants and non-Sacco member participants were unanimous that Saccos had three attributes that stood out more than others—accessibility, commitment to savings, and faster loan processing/networks. The study also showed that Saccos were more likely to show seriousness in education and training compared to other financial institutions in an endeavour to improve loan repayment rates. To meet members’ financial needs, Saccos offer basically three loan products but which are used to meet a wide range of economic and social activities. Unlike Saccos, fewer non-Sacco Participants have ever been granted loans from their financial institutions prompting both members and non-members to prefer Saccos over other forms of financial institutions. Lastly, the study results show that participants had a mixed opinion on the monitoring of loan utilization. Although, they would prefer one to provide a loan utilization report prior to being granted the next loan, Sacco participants do not favour Saccos having a supervisory role. These study results are important in assisting authorities to come up with policies that may facilitate Saccos become a tool of mass mobilization in mitigating the negative impacts of poverty. It will enable the formulation of Sacco-related strategies that can be utilized to improve the country’s poverty situation through enhancing livelihoods and the standards of living.