Governance Practices and Performance of Deposit-taking Savings and Credit Co-operatives: A Researcher's Reflections

Several lessons were learned in the course of doing the research. One lesson learnt was that there is need for SACCOs to embrace a higher level of disclosure of governance information. Whereas it is encouraging to note that a majority of SACCOs have websites, some critical governance information was missing from their websites. For example information on the names, gender, age, academic qualification, how long one has served as a board member could not be found from the websites.

It was also surprising to note that even some members in one of the largest SACCO in Kenya did not even know who their board members are. Some SACCOs were reluctant to give straightforward in formation on the gender of their board members. This indicates the high level of suspicion within SACCOs with regard to general enquiries on their operations. Whereas some SACCOs had posted details of their financial information on their websites, a majority did not. We would encourage SACCOs to post five year financial information on their websites to aid in promoting research in the Sacco sector.

On positive note, the SACCO Societies Regulatory Authority is a very open institution that allows researchers to walk in and collect data. This has helped a great deal in promoting SACCO research. However, we would encourage SASRA to benchmark with Central Bank of Kenya Supervision reports in which the performance of each bank by Return on Assets and Return on Equity is provided in the report. This promotes research since researchers rely on centrally generated performance data as opposed to computing the returns on their own.

In a nutshell, my study reveals that SACCOs in Kenya have complied with most of the SACCO Societies Regulatory Authority’s prudential regulations. However, they still experience challenges in liquidity management and the over involvement of board members in the daily operations of the SACCO. The study also reveals that SACCO performance has improved with continued compliance with SACCO regulations over the four year period being studied. 

Author: Joseph Taracha, 13 May 2015

Editor: David Mathuva