Prudent Borrowing Practices and Growth of Savings and Credit Cooperative Societies

Abstract

Poverty has resulted to limited means of living, leading low income earners to outsource other means of improving their living standards. Formation of savings and credit co-operatives has been one successful avenue. Over time they have strived to mobilize funds and grant credit to their members but they have not been able to sufficiently grow. This study sought to assess prudent financial management practices on growth of Savings and Credit Cooperative Societies (SACCOs) in Nakuru County.  Study objective was to establish the effects of prudent external borrowing practices on growth of SACCOs in Nakuru County. The study was conducted using descriptive survey research design. The study population comprised of all the financial and operations managers of 106 registered SACCOs in Nakuru County. The sampling frame was drawn from the Kenya Union of Savings and Credit Co-operatives list of registered SACCOs in Nakuru County. The sample size for the study composed of 84 managers of SACCOs in Nakuru County. Stratified random sampling technique was used to select the two strata in the study sample; 42 operation managers and 42 finance managers. Primary data was obtained from the managers of the SACCOs using a structured questionnaire. Data was analyzed using descriptive statistics such as frequency counts, percentages, means and standard deviation. Pearson correlation was used to analyze the relationship between variables. The study found out that prudent external borrowing had a positive impact on growth of Saccos therefore; the researcher recommended that Central Bank of Kenya, which has the mandate of overseeing the implementation of prudent financial management practices should design a strategy for ensuring adoption and implementation of prudent financial practices in Saccos.