Factors Affecting Sacco Membership in Kenya: A Case of Nairobi County

Abstract

Despite SACCOs being on the forefront to offer financial services to their members, they are faced with a myriad of challenges which include: poor customer care services, poor governance, lack of member confidence, low use of technology, insufficient financial services, high registration costs and increasing interest rates among others. There exists a gap in literature which this study aims to fill by trying to examine the factors affecting SACCO membership in Kenya. Specifically, the study sought to investigate the influence of financial services offered by SACCOs, members’ income and cost of SACCO services on SACCO membership in Nairobi County, Kenya. The accessible population of the study were members from 10 selected SACCOs within Nairobi County namely: Afya SACCO, Elimu SACCO, Hazina SACCO, Kenya Bankers SACCO, Kenya Police SACCO, Mwalimu National SACCO, Safaricom SACCO, Sheria SACCO, Ukulima SACCO and Kimisitu SACCO. A survey research design was used. The target population of the study consisted of 197,527 members who were drawn from the 10 selected SACCOs operating in Nairobi County. The sample size was 150 respondents from the 10 selected SACCOS in Nairobi County. Structured questionnaire were used to collect primary data. A regression model was estimated. The autonomous duration of SACCO membership by the sampled members all factors held constant was 7.35 years. On financial services offered by SACCOs, the results indicated that a unit drop in the rating of financial services reduced SACCO membership duration by 0.46 years. On absolute income of members, the results indicated that a unit increase in member’s absolute income had a positive impact in SACCO membership by 0.480 years. On the cost of SACCO membership, the results indicated that unit increase in cost of SACCO membership was likely to act as a prohibitive factor reducing duration of SACCO membership by 0.15 years. The following recommendations were made in lieu of the study’s objectives:- SACCOs should improve their financial services to attract members and retain them for many years. Some of the ways through which SACCOs can improve their financial services are through providing quarterly statements, providing loans which have short and long payment durations based on members capability and through the provision of insurance loans among others. On absolute income of members, SACCOs should continue to accommodate existing members as well as focus on targeting new members in the market who have high absolute incomes and thus high disposable incomes. On cost of SACCO services, SACCOs should ensure that that they have reasonable membership costs with no hidden charges. Members should be well informed about the costs they are likely to incur before they apply for membership.  This study will be useful both to researchers and academicians and policy makers. Researchers will use it as a reference for different studies, and by enabling the development of more studies under the field of factors influencing SACCO membership not only in Nairobi but Kenya at large. Policy Makers will understand factors which affect SACCO membership so as to make judicious policies which will have robust impacts on the members and society at large.

Keywords: Savings and Credit Co-operative Societies, membership, financial services, members’ income.