Financial challenges facing savings and credit co-operative societies in kenya: The case of saccos in Nairobi
Co-operatives play a major role in resources mobilization, agro-processing and marketing of agricultural produce. The movement plays an important role in wealth creation, food security and generation of employment and therefore alleviating poverty. From the foregoing it is evident that the cooperative movement is of strategic importance in encouraging national savings and development of the country. Changes that occur in the co-operative sector therefore affect the development of the country and the general welfare of the members. Given the increasing aggressiveness by commercial banks in the country to increase their product range to both their clients and non-clients and their marketing techniques that ensures wide coverage, a question for this study is that has this affected the operations of the SACCO movement in the country? Thus the objective of the study is to establish if there is any threat to the business of SACCO’s by the banks with the competitive products that the commercial banks offer to members of co-operative Societies and how it affects the profitability of Savings and credit co-operative Societies. This study adopted a descriptive research design. The population of the study comprised of all SACCOs in Nairobi, registered in the role of co-operatives. The data was collected through the use of Questionnaires which were circulated to the treasurers or managers of the SACCOs sampled. Data was collated, coded summarized and then analyzed using the Statistical Package for Social Sciences (SPSS Version 17). The study concluded that SACCO suffered challenges in meeting loan requests by the members partly due to the Long term investments they engage in. Members of the SACCOs preferred loans from the bank to the ones from the SACCOs due to the speed within which the loans are disbursed and also due to the fact that amount of loan awarded is not pegged on saving as is the case in SACCOs. The study recommends that SACCOs should change their mode of recovery of loans so that an equal amount is deducted every month until the loan is cleared besides introducing more products to its members such as vehicle Insurance premium financing so as to increase their profitability.