The Determinants Of The Financial Performance Of Savings And Credit Cooperative Organizations In Nairobi- Kenya

Abstract

The objective of this research was to establish those factors that influence the financial performance of SACCOs in Nairobi. Theoretically, it's assumed that Education and Training, Nature of the Business, Long Term Investment and Management Practice; when correctly put into place, greatly improve the Financial Performance of SACCOs. This research focused squarely on the Financial Performance of SACCOs operating in Nairobi. The study sampled 33 FOSA SACCOs in Nairobi; of which 28 responded and were considered for the purpose of this study. Comparative analysis of these 28 SACCOs financial performance was conducted to establish whether these SACCOs were reaching targeted profit or have improve financial performance. Primary data was collected for the 28 SACCOs. The study found that the Education and Training of Staff, the Nature of the Business, Long Term Investment needs and Management Practice had a definite positive effect on the profitability of these SACCOs in Nairobi. The analysis of the profitability 28 SACCOs in Nairobi provided different positive results. These results were attributed to the proper implementation of these factors. These four factors do not however determine fully the financial performance of SACCOs since they leave out 42.2% of some unexplained variance. Education and Training was found to have a direct relationship with Sacco's financial performance, whereas Management Practice, Nature of the Business and Long Term Investment has a positive relationship with the financial performance of these SACCOs. There is need for senior level management staff to put in more effort towards improving the financial performance of SACCOs. There is a significant gap in the commitment shown by middle and junior managers to that shown by senior level managers and this needs to be addressed. The four variables under consideration do not account for 100% of the financial performance of SACCOs. It will be important for SACCOs to find out more on the factors that determine their financial performance.