Influence Of Debt Management On The Performance Of Sacco Funded Projects: A Case Of Unaitas Savings And Credit Co-Operative Society Limited In Murang’a County, Kenya

Abstract

Although SMEs play a crucial role in economic growth and employment they face challenges related to access to finance that undermines their economic prosperity. However, the emergence of SACCOs, has enabled many business owners to access finance when they want to launch new products, expand their business or start new businesses. Nevertheless, lack of proper business planning and financial skills affect the performance of the Sacco funded businesses. This in this way prompts to collection of non-performing credits and henceforth the crumple of the SACCOs. The motivation behind this study was to explore on the impact of obligation administration on the execution of Sacco financed extends in Muranga County by concentrating on Unaitas Sacco society restricted. The concentrate additionally looked to set up the impact of business arranging, advance characteristics’ mindfulness, borrowers level of monetary abilities and credit chance relief approaches on the execution of SACCO subsidized activities in Muranga County. The study will utilize a distinct review outline. The objective population was 154 staff and 135 individuals from Unaitas Sacco society restricted in Muranga County. The example size was resolved the by utilization of Krejcie and Morgan test measure assurance table. Stratified arbitrary inspecting was utilized to choose 127 respondents from the objective populace. This study utilized essential information which was gathered by utilization of polls. The study utilized a survey as the essential device for information gathering. Information investigation was quantitative and was broke down by utilization of the factual bundle for sociologies (SPSS rendition 20). Illustrative measurements were used to dissect quantitative information. Spellbinding insights included recurrence appropriation, rates, measures of focal propensities (mean) and measures of scattering (Std deviation). The information was then introduced in tables and charts. Furthermore, connection investigation was utilized to set up whether there is a relationship between the ward and the free factors. The study found that there is a positive huge relationship between business arranging, credit hazard moderation methodologies, borrowers' advance characteristics’ mindfulness and borrowers' level of monetary aptitudes. The study found that strategies for success help an association in securing stores from Saccos and add to the reasonability of the firms’ execution. The study also found that investment decision-making skills, financing decision-making, cash-flow management skills, record keeping skills, cost management skills and finance management help an enterprise in meeting its financial obligations and improves its competitiveness, growth and performance. The borrowers were made aware of loan repayment period and instalment amount per month. However, they were not made aware of interest rate of their loans per annum and default penalties charged upon defaulting. The study found that credit risk mitigation approaches used by Unaitas Sacco Limited include credit insurance, use of collateral to secure loans, third party guarantors and enforcement of penalties for default. This study recommends that Saccos should put it as a requirement that entrepreneurs should present a business plan before getting funds from the Saccos. In addition, entrepreneurs should develop business plans so as to improve the performance of their businesses. The study also recommends that Saccos should offer training to their members to improve their financial skills. Saccos should also make use of approaches like credit insurance, use of collateral to secure loans, third party guarantors and enforcement of penalties.