CHALLENGES AFFECTING GROWTH OF SAVINGS AND CREDIT COOPERATIVE SOCIETIES IN KENYA: A CASE OF HARAMBEE COOPERATIVE SOCIETY

^1* Juliet Odhiambo ^2*Dr. Margaret A. Oloko

^1*School of Business, Jomo Kenyatta University of Agriculture and Technology

P. O. Box 62000, 00200 Nairobi, Kenya.

^2*School of Business, Jomo Kenyatta University of Agriculture and Technology

P. O. Box 62000, 00200 Nairobi, Kenya.

Corresponding Author email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

CITATION: Odhiambo, J., & Oloko, A., M., (2016). Challenges Affecting Growth of Savings and Credit Cooperative Societies in Kenya: A Case of Harambee Cooperative Society. International Journal of Strategic Management. Vol. 5 (5). Pp 20-37.

ABSTRACT

Reports from Kenya Union of Savings and Credit Cooperative Society indicate that membership in the Sacco was declining due to delay in loan disbursement, poor ATM services, inadequate credit facilities, fraud, understated bad debts, increase in demand for loans that have been fabricated, inadequate staffing and lack of efficient and effective information management system, cover up of massive fraud and understated bad debts which accrued risking billions in losses of members' money. The objective of this project was to examine the challenges affecting growth of Saccos in Kenya. The study adopted a descriptive research design. Data was collected from both primary and secondary sources. The target population comprised 210 staff working at the Sacco with their headquarters in Nairobi and more particularly the top, middle and lower level management staff. Stratified sampling method was used in selecting the sample of 63 respondents. The findings showed that a unit increase in corporate governance will lead to a 0.270 increase in growth of cooperatives in Kenya; a unit increase in information technology will lead to a 0. 032 increase in growth of cooperatives in Kenya; a unit increase in employee training, will lead to a 0. 305 increases in growth of cooperatives in Kenya and a unit increase in organizational structure will lead to a 0.391 increase in growth of cooperatives in Kenya. In conclusion, the study found out that the use of information technology contributes to the success of the implementation of international strategies in Saccos in Kenya. Information technology will accelerate changes in how markets conduct its activities. Lack of employees training is a challenge affecting growth of Saccos in Kenya. Cooperatives face management challenges, cooperatives does not comply with principles of corporate governance, cooperatives are well equipped to implement corporate governance, board members doesn’t guide the cooperative during a crisis and the board independence is a challenging aspect of corporate governance in the cooperative. The study recommends that Saccos management should ensure effective corporate governance which ensures that long-term strategic objectives and plans are established and the proper management and structures are in place to achieve these objectives. Cooperatives should constantly update their software and hardware to ensure that compatibility issues and increased knowledge of security systems and enhance competition. Cooperatives should educate members, staff and committee members on the affairs of cooperative movement, their rights and obligations, the legal framework, business ideas, good governance, leadership and investment. Regarding, organizational structure the study recommends independence, interaction and communication among employees.

Keywords: Corporate governance, Information technology, Training, Organization structure, growth of cooperatives

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