Volume 4, Issue 3, June 2016, Page: 90-101
Strategic Factors Affecting Compliance with the Sacco Act of 2008 by Financial Co-operatives in Kenya: A Case of Nairobi County Sacco
Ochieng Victor Omollo, Department of Business Administration, Egerton University, Njoro, Kenya
Christine Ronga, Department of Business Administration, Egerton University, Njoro, Kenya
Received: May 5, 2016;       Accepted: May 14, 2016;       Published: Jun. 4, 2016
DOI: 10.11648/j.sjbm.20160403.15      View  4266      Downloads  108
The aim of the study was to address the strategic factors that affect compliance with the SACCO Act of 2008 by Financial Co-operatives in Nairobi County. Despite the fact that SASRA regulations have been in operation for the last four years, the strategic factors that affect compliance with the Act of 2008 has not been established. The study adopted a census survey of 42 Financial Cooperatives. Data was collected using a questionnaire and analyzed using descriptive statistics with the aid of Statistical Package for Social Sciences software. Multiple regressions were used in testing the strategic factors affecting compliance with the SACCO Act of 2008 by Financial Co-operatives in Nairobi County. The study found that, ICT capacity of the SACCOS in Nairobi County are inadequate; The SACCOs in the county have not attained the required human resource capacity and 80% of the SACCOs have not fully complied with the Societies’ Act of 2008. The researcher’s conclusion and recommendations was that ICT capacity, corporate governance and human resource capacity were found to be important as far as compliance with the Societies’ Act number 14 (2008). These factors present challenges that hinder financial cooperatives from compliance. Therefore Sacco societies Act should be reviewed to ensure as many financial cooperatives are able to comply with the Act as possible in order to ensure that members deposits held in the current outfits are protected as the small and emerging Saccos endeavour to overcome the compliance challenges. The research recommends SACCO’s to establish a training program to enhance management capacity on compliance issues. Meanwhile the board of directors should initiate change management with an aim of setting realistic user expectations objectives and goals.
Co-operative, Corporate Governance, Financial Co-operatives, Compliance, Information and Communication Technology
To cite this article
Ochieng Victor Omollo, Christine Ronga, Strategic Factors Affecting Compliance with the Sacco Act of 2008 by Financial Co-operatives in Kenya: A Case of Nairobi County Sacco, Science Journal of Business and Management. Vol. 4, No. 3, 2016, pp. 90-101. doi: 10.11648/j.sjbm.20160403.15
Copyright © 2016 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abdullah, H. & Valentine, B. (2009). Fundamental and Ethics Theories of Corporate Governance. Middle Eastern Finance and Economics (7), 88-96.
ACCOSCA. (2012). Challenges facing SACCO Regulation in Africa. Available on www.accosca.org/index.php?
Alchian, A. A. & Demsetz, H. (1972). “Production, Information Costs and Economic Organization” American Economic Review, 62, 772-795.
Arthurs, J., & Busenitz, L. W. (2003). The boundaries and limitations of agency theory and stewardship theory in the venture capitalist / entrepreneur relationship Entrepreneurship Theory and Practice, 28 (2), 145-162.
Armendariz B. Editors (2011) The Handbook of Microfinance. World Scientific Publishing Company.
Becker, G. S. (1993). Human capital: A theoretical and empirical analysis with special reference to education (3rd Ed.). Chicago: University of Chicago Press
Bhimani, A. (2008). “Making Corporate Governance Count: The Fusion of Ethics and Economic Rationality”. Journal of Management and Governance 12 (2), 135-147.
Bosch, H. (1995). Corporate practices and conduct, 3rd Ed. FT Pitman, Melbourne Cooperative Bank of Kenya (2008). Cooperative Bank of Kenya Report on the SACCO movement in Kenya, AFRACA workshop. Nairobi, Kenya. Available on www.afraca.org/main.
Coleman, J. (1988) “Social Capital in the Creation of Human Capital” American Journal of Sociology 94 Supplement: S95-S120
Collins, J. & Porras, J. (1994). Built to last: Successful habits of visionary companies. New York: Harper Business.
Clarke, T. (2004). “Theories of Corporate Governance: The Philosophical Foundations of Corporate Governance” London and New York: Routledge.
Creswell, J. W. (2005). Educational research: Planning, conducting, and evaluating qualitative and qualitative research 2nd Ed.: New Jersey: Pearson Merrill Prentice Hall.
Cuevas & Fischer K. P. (2006). Cooperative Financial Institutions: Issues in Governance, Regulation, and Supervision. World Bank Working Paper No. 82. World Bank, Washington, DC.
Daily, C. M., Dalton, D. R. & Canella, A. A. (2003). Corporate Governance: Decades of Dialogue and Data. Academy of Management Review 28 (3), 371-382.
Davis, J. H., Schoorman, F. D. & Donaldson, L. (1997). Toward a Stewardship Theory of Management. Academy of Management Review 22, 20-47
Delaney, J. T. & Huselid, M. A. (1996). The impact of human resource management practices on perceptions of organizational performance. Academy of Management Journal, 39: 949-969.
Dess, G. G. & Picken, J. C. (1999). Beyond productivity: How leading companies achieve superior performance by leveraging their human capital. New York: AMACOM
Dillon, A. & Morris, M. (1996). User acceptance of new information technology: Theories and models. Annual review of information science and technology. Medford (NJ), pp 3-32
Donaldson, L. & Davis, J. (1991). Stewardship Theory or Agency Theory: CEO Governance and Shareholder Returns. Academy of Management Review 20 (1), 65.
Garavan, T. N., Morley, M., Gunnigle, P., & Collins, E. (2001). Human Capital accumulation: The role of human resource development. Journal of European Industrial Training, 25 (2/3/4), pp 48-68.
Gratton, L. & Ghoshal, S. (2003). Managing personal human capital: New ethos for the “volunteer” employee. European Management Journal, 21 (1), pp. 1-10.
Gunga, S. O (2008). The Co-operative movement in Kenya and its potential for enhancement of ICT livelihoods. Published Journal. University of Nairobi, Kenya International Cooperative Alliance (2000) Annual report
Jensen, M. C. & Meckling, W. (1976). “Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure”. Journal of Financial Economics 3, pp 305-360.
Kioko, B. (2010): The impact of SASRA regulations on the financial performance of SACCO’s in Kenya. Nairobi Kenya
Kiuma, A. M. (2008). Change management practice-The case for Nyati and Elimu savings and credit co-operative societies' U O N MBA Project
Kothari, C. R. (2004): Research Methodology, Methods and Techniques, New Age International Publishers, 2nd Ed. New Dehli, India.
Kombo, D. K & Tromp, D. L. (2006). A project and thesis writing: An introduction. Nairobi Paulins publications Africa.
Labie, M. & Mersland, R. (2011): Corporate governance challenges in microfinance; The Handbook of Microfinance, World Scientific Publishing Company, pp 283-300
Mersland, R. & Strom, R. (2009). ‘Performance and governance in microfinance institutions’ Journal of Banking and Finance 33, pp 662-669.
Murtishaw, S., & J. Sathaye. (2006). Quantifying the Effect of the Principal-Agent Problem on US Residential Energy Use. LBNL-59773. Berkeley, Calif.: Lawrence Berkeley National Laboratory
Muriuki, K. & Ragui, M.: Impact of the SACCO Societies Regulatory Authority (SASRA) Legislation on Corporate Governance in Co-operatives in Kenya, Public Policy and Administration Research, Vol. 3, No. 6, 2013.
Mitnick, B. M. (2006). Origin of the theory of agency; an account by one of the originators, Social Sciences Research Network; Working Paper Series, university of Pittsburgh, http://www.ssrn.com/abstract
Mugenda, M. & Mugenda, A (2003), Research Methods, Qualitative and Quantitative\approaches, African Centre for Technology Studies, Nairobi, Kenya.
Murungi K. M. (2003). The Development of Co-operative Law and Policy in Kenya. Oscan Print, Kenya
Nair, A., Kloeppinger-Todd, R. & Mulder, A. (2004) Leasing, an Underutilized Tool in Rural Finance. World Bank, Agriculture and Rural Development Discussion Paper 7. Washington 2004.
Nahapiet J, & Ghoshal S. 1998. Social capital, intellectual capital, and the organizational advantage. Academy of Management Review 23 (2): pp 242–266.
Ngechu, (2004). Understanding the Research Process and Methods: An introduction to Research Methods Nairobi, Acts Press.
Odera, (2012) Corporate Governance Problems of Savings, Credit and Cooperative Societies, International Journal of Academic Research in Business and Social Sciences, Vol. 2, No. 1.
Orodho, A. J (2002). Essential of educational land social science researchers’ methods. Nairobi: Masda publishers.
Padilla, A. (2002) “Can Agency Theory Justify The Regulation Of Insider Trading”. The Quarterly Journal of Austrian Economics, Vol. 5, No. 1, pp. 3-38
Peters, T. & Waterman, R. (1982). In search of excellence. New York: Harper & Row. Organisation for Economic Co-operation and Development (OECD) (1999). Measuring and reporting intellectual capital: Experience, issues, and prospects an International symposium.
Rastogi, P. N. (2000). Sustaining enterprise competitiveness – Is human capital the answer? Human Systems Management, 19 (3), pp. 193-203.
Republic of Kenya (2008), The SACCO's societies Act 2008, Nairobi, Government printers.
Republic of Kenya (2008), Ministry of Co-operative and Development report, Nairobi, Government printers
Republic of Kenya (2010), Ministry of Co-operative and Development report, Nairobi, Government printers
Rumelt, R. (1984). Towards a strategic theory of the firm. In R. Lamb (Ed.) Competitive Strategic Management (556-570). Englewood Cliffs, CA: Prentice-Hall.
Thompson, J., Aurthur, A., Strickcan, A. J & Gamble, J. E (2010). Crafting and Executing strategy. New York, NY, 100200: McGraw-Hill/Irwin
Tricker, R. I. (1994). International Corporate Governance. Simon & Schuster, Singapore.
Wagner, J. A. (1994). Participation's effect on performance and satisfaction: A reconsideration of research evidence. Academy of Management Review, 19: pp 312-330.
Wright, P. M., Dunford, B. B., & Snell, S. A. (2001). Human resources and the resource-based view of the firm. Journal of Management, 27: 701-721.
World Council of Credit Unions, (2005) Statistical Report. Available at www.woccu.org
Browse journals by subject