Internal Factors Affecting Growth Of Savings And Credit Cooperative Societies In Machakos County, Kenya

ABSTRACT

The Kenyan SACCO business plays a key role in contributing to the country‟s savings, that has

boosted social development and the economy. Co-operative societies in Kenya may be traced to

the pre-independence times with initiation of development in the time immediately after the

country gained independence. Most SACCOs in Machakos begin and fail to reach the breakeven

point and thus end up closing down. It is against this backdrop, that this study sought to

interrogate the effects of internal factors as far as growth of SACCOs in Kenya is concerned,

particularly those within Machakos County. The aim of the study was to establish the internal

factors affecting the growth of Savings and Credit Cooperative Societies in Machakos

County. The study‟s specific objectives included; determining the effects of management

skills in the growth of SACCOs, establishing if adoption of technology affect growth of

SACCOs, establishing the effect of loan portfolio management in the growth of SACCOs,

and establishing whether human resource capacity affect the growth of SACCOs, in

Machakos County. The study used the agency theory, stewardship theory, liquidity and

contingency theories. Several empirical studies were reviewed all the way from international

to regional and local scholarly works. Descriptive research design was applied in the study

whereby census was used for the whole chosen population. The 33 active SACCOs found in

Machakos County formed the target population; focusing on the SACCO‟s departments

involved in top management, loan management, human resource and IT departments, thus

purposive sampling was applied to select one hundred thirty-two (132) respondents since out

of the 33 targeted SACCOs, each had four respondents from the said departments.

Questionnaires having open and closed ended questions relating to the objectives were used

to collect primary data. Both descriptive and inferential statistics were applied in the study to

analyze data from the questionnaires. SPSS version 21 software was used to code and analyze

data. Tables were used in data presentation. The study established that management skills

positively and significantly affected the growth of SACCOs in Machakos County. Regarding

loan portfolio management on growth of SACCOs in Machakos County, the study

established that loan portfolio management negatively and weakly affected the growth of

SACCOs in Machakos County. The study indicates a weak positive relationship between

human resources capacity and growth of SACCOs in Machakos County. The study

established that the SACCOs in Machakos County have to some extent invested in IT, which

has positively and significantly led to growth of the SACCOs. The study concluded that

managerial skills, human resource capacity, adoption of Information Technology and loan

portfolio management have influence on growth of SACCOs in Machakos County.

Recommendations of the study are that the institutions should undertake an internal factor

evaluation and practice of the administrative functions that impact the growth of SACCOs,

policy guidelines should take its position in ensuring that SACCOs are operated in the best

line of their expected performance obligations and there was still some room for further

future studies that would examine on the best factors to apply on the Kenyan SACCOs, that

would enhance a more competitive SACCO business especially in consideration of the daily

emerging business cycle trends in the world.