CORPORATE GOVERNANCE AND PERFORMANCE OF SAVINGS AND CREDIT COOPERATIVE SOCIETIES IN KILIFI COUNTY, KENYA
Ali Farah Ahmed - Master of Business Administration (Strategic Management), Kenyatta University, Kenya
Maina Rugami - Department of Business Administration, Kenyatta University, Kenya
ABSTRACT
The SACCO sector is becoming increasingly important in Kenya. This sector is a key player in the economy, controlling about 43 per cent of Kenya’s gross domestic product therefore called for an investigation into the effect of corporate governance on the on performance of SACCOs in Kenya. The total assets in the Kenya’s SACCO sector increased to K.sh.248 billion from K.sh. 216 billion in 2010. Cross-cutting issues affecting performance of SACCOs in Kenya include governance, inadequate human resource, weak regulations and supervision, limited products and services, low marketing, innovation and poor image. The other challenges have been low capitalization, poor information technology, and high taxation, lack of financial standards, HIV/AIDS and non-remittance of deductions by employers in addition there are inadequate research findings on how and to what extent these factors influence the performance of the SACCOs in Kenya. The general objective of the study was to establish the influence of corporate governance on performance of SACCOs in Kilifi County. The specific objectives of the study were to establish the influence of board composition, size of the board, board members qualification and gender balance of the board members on the performance of SACCOs in Kilifi county. The study was anchored on two theories which include agency theory and stakeholders’ theory. The study used descriptive research design. The target population for the study was 200 respondents from the 40 SACCOs with offices in seven sub-counties of Kilifi County. The study used purposive sampling technique to select only 30 SACCOs which are registered, operational and have their records with the Directorate of Cooperative in Kilifi County with each 5 board members making the sample size of 150 respondents. The researcher used a semi-structured questionnaire administered to each member of the sample population. The researcher carried out a pilot study to pretest and validate the questionnaire. Quantitative data collected was analyzed by the use of descriptive and inferential statistics using SPSS. The analysed data was presented in graphs, frequencies, charts and tables for interpretation and to enable draw conclusions and recommendations thereof. The study established that corporate governance was a significant factor in determining performance of the performance of the SACCOs in Kilifi County. The study concluded that the boards of directors among the SACCOs in Kilifi County were moderately representative, diverse, professional and qualified. The study further concluded that lean or small board size but professional and qualified contributed positively and significantly to the performance of the SACCOs due to their efficiency and effectiveness in decision making, management, communication, coordination, monitoring and in operation cost. The study concluded that the board members among the SACCOs in Kilifi County have the necessary knowledge, skills, experience and ideas to improve the performance of the firms. The study further recommended that SACCOs in Kilifi County didn’t have gender balance among their boards with the male gender dominating. The female gender was not fairly represented and delegated leadership roles. However there was at least a female board member among the SACCOs included in the study. The study recommends that the SACCOs need to ensure that the boards are representative, diverse, professional and qualified. The study recommends that lean or small board size but professional and qualified should be embraced among the SACCOs due to their efficiency and effectiveness in decision making, management, communication, coordination, monitoring and in operation cost.
