Effect of Cash Management Practices on the Growth of MatatuSaccos in Kimilili Sub-County, Bungoma County, Kenya

Abstract

Matatus form the informal industry in Kenya which provide services to Millions of people daily. They provide a basis for the transportation system in Kenya . Kenyan transport sector play an important role in  linking up various sectors of the economy. Matatutransport contribute over 80% of the total Public transport in the country (Republic of Kenya 2002). The ministry of transport directed that all Matatus to operate as either Sacco or limited liability Company by 2010. Despite the government effort on this,  MatatuSaccos have not been able to grow in terms of profit , Assets and market share. Its based on this that the study was designed to establish the causes of poor Sacco growth. The purpose of the study was to assess the effect of cash management practices on Matatu Sacco growth in Kimilili Sub- County. The study objectives were; to establish the effect of cash budgeting as a cash management practice on matatu Sacco growth; to establish the effect of cash control as cash management practice on Matatu Sacco growth; Establish the effect of financial planning as a cash management practice on Matatu   Sacco growth, Evaluate the extent of growth of Matatu Sacco and establish the relationship between cash management practice and Matatu Sacco growth in Kimilili Sub- County, Bungoma County, Kenya.

Independent Variables in the study were; Cash budgeting practice,  cash control practice and cash planning. The dependent variable was Sacco growth in terms of profit, Assets and market share. Empirical studies has shown research done on business failure in Australia, Financial management practice of small firms in Ghana, Performance of MatatuSaccos in Kiambu county, and cash management and growth of small scale businesses in Ntungamo Market Uganda. Little research has been done on the effect of cash management practices on Matatu Sacco growth in Kimilili Sub – County, Kenya thus a gap to fill. The target population of the study was 169 Matatu Sacco owners/ members. The study used a descriptive research design. The study employed both closed ended structured questionnaires and open ended unstructured questionnaires. Stratified and Random sampling techniques were used in determining a sample size of 34 Matatu Sacco members owners Both descriptive and inferential Statistics were used in the study. Frequency distribution tables and percentages were used to present raw data for interpretation. Regression analysis was performed to establish the relationship between cash management practices and Matatu Sacco growth. A statistical package for social sciences was used in  analyzing  data

The findings of the study were; Cash Management practices of Matatu Sacco were not efficiently done as majority of Sacco Matatu owners had means below the average mean of 3. The study showed that Sacco growth was positively related to cash management practices. The coefficient of determination R2 indicated that 86% of variations in Matatu Sacco growth could be explained by changes in cash management practices. The study concluded that cash management practices make a significant contribution to the growth of MatatuSaccos. Its based on this that the study recommends practices of efficient cash management so as to improve on growth of MatatuSaccos. The study agrees with other research finding that established a positive relationship between cash management practices and firms  performance.