The financial management problems in savings and credit co-operatives societies:The case of Nyati Sacco

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dc.contributor.author Goto, Dub
dc.date.accessioned 2020-01-24T13:42:59Z
dc.date.available 2020-01-24T13:42:59Z
dc.date.issued 2004
dc.identifier.uri http://erepo.usiu.ac.ke/11732/5309
dc.description A Project Report Submitted to the School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration en_US
dc.description.abstract The co-operative movement has been an important instrument for mobilizing human and financial resources for national development. Over the years, the sector has mobilized savings and deposits totaling 94 billion Kenya shillings, for onward lending to members (Kibaki, 2003). However, according to the Kenya government, the sector's performance over the last two decades has been undermined by mismanagement, corruption and outright theft of members' contributions. The purpose of this study is to highlight the importance of sound financial management practices in the success of SACCOs. The study was guided by the following research questions; (1) What are the causes of financial management problems in SACCOs? (2) To what extent does financial mismanagement hamper the achievement of the SACCO's objectives? (3) What actions have been taken to curb financial mismanagement in SACCOs? Taking the case of Nyati SACCO, the study relied on documentary evidence to bring out the answers to the above questions. To complement this, structured questionnaires were administered to the past and present officials and members of the SACCO. The data collected were summarized, graphed, and then analyzed by the use of descriptive statistics. The study findings reveal that poor management is the major cause of financial problems of SACCOs. The running of the SACCOs is the responsibility of the Central Management Committees. These Committees cannot be effective if their members; (1) are largely semi-illiterate, (2) are corrupt, (3) lack integrity, (4) do not have basic management skills to run co-operative societies, and (5) are driven by self-interest rather than service to members. Special-purpose committees, and in particular, the supervisory committee, were manned by ignorant members who could not offer any meaningful advice. In addition, the Nyati SACCO secretariat did not have adequate manpower both in terms of numbers and skills. Apart from the inadequate staffing, there was virtually no internal control system, and this encouraged unscrupulous individuals to misappropriate the SACCOs resources. The regulatory body, which in this case was the Ministry of Co-operative Development, did not appear to have the will and resources to supervise the activities of SACCOs. The legislative environment under which they operated failed to address several key aspects like the effective electoral process for officials and delegates, and the penalty systems for the officials who mismanage SACCOs. Financial mismanagement of Nyati SACCO had far reaching consequences on the SACCO's performance. It led to: (1) the weakening of its ability to give loans, (2) pulling out by existing members and inability to attract new ones; and (3) threat of industrial unrest. In order to curb this financial mismanagement problem, the following actions were taken: (1) replacement of the then management committee with a more appropriate team, (2) recruitment of qualified staff, and (3) close monitoring of the SACCO's activities by the management of the employer company. Further, the study found that financial mismanagement could easily cripple the operations of the SACCOs, and remedial measures may take quite a long time to bring situations to normal. It is therefore imperative that these problems are avoided in the first place. This can be accomplished by taking the following measures: (1) election of competent team of management committee, (2) recruitment and maintenance of high caliber staff, (3) strengthening the capacity of the supervisory committee, (4) establishing internal audit function where appropriate, (5) reviewing the current co-operative law, (6) education of members, and (7) use of information technology. en_US
dc.language.iso en en_US
dc.publisher United States International University - Africa en_US
dc.subject Financial management problems, savings and credit co-operatives societies en_US
dc.title The financial management problems in savings and credit co-operatives societies:The case of Nyati Sacco en_US
dc.type Thesis en_US

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