Professional Documents
Culture Documents
PERFORMANCE OF
SACCOS
BY
Mariam
REG NO:
FEBRUARY 2015
Table of Contents
ABSTRACT.................................................................................................................
CHAPTER ONE..........................................................................................................
1.0 Introduction......................................................................................................
1.1 Background of the Study..................................................................................
1.2 Problem statement............................................................................................
1.3 Research Objectives........................................................................................
1.3.1
Specific Objectives......................................................................................
REFERENCES:............................................................................................................
ABSTRACT
This research aims at looking at Corporate Governance, and financial
performance of SACCOs with Tala Lya Mawogola Credit Saving Society in
Uganda as the Case study. Some of SACCOs have come under spotlight for
cases of mismanagement and a number of them have closed. The research set
out to: establish the level of compliance with corporate governance guidelines,
determine the relationship between corporate governance, examine the
relationship between risks and financial performance, as well as examine the
relationship between corporate governance and financial performance of
SACCOs.
CHAPTER ONE
1.0 Introduction
This chapter will peruse through the background of the study, the
problem statement, objectives of the study, general objectives and
specific ones, research question, the scope of the study and the
importance of the study.
1.1 Background of the Study
Savings and credit cooperatives or other terms that differ across regions of
the world are among the poorly understood entities in most countries that
comprise the existing institutional base for financial intermediation (Cuevas
and Fisher, 2006). These institutions are member owned whose core
business is to encourage thrift and easy access to credit to their members.
Members pull resources together in form of savings, and the SACCO uses
the mobilized savings to extend small credit facilities to them (Were, 2009).
They are user owned financial cooperatives that offer savings, credit and
other financial services to their members (WOCCU report, 2005).
Co-
as
the
member
representatives.
The
Board
adopts
the
fundamental policies of the SACCO and has them ratified by the Shareholder
Assembly. The Executive Management develops proposals for the policies
and important business decisions, refines them through consultation with
the appropriate Board Committees, which endorse them for adoption by the
full Board. Finally, the Executive Management is responsible for running the
daily operations within the confines of the Boards approved policies and
procedures.
the
particularly among SACCOs where risk were highest, given that they
collected and intermediated members savings.
in
Uganda
have
traditionally
suffered
from
opaque
1.3.1
Specific Objectives
To examine the relationship between corporate governance and
financial performance of Tala Lya Mawogola SACCO in Ssenbabule
District.
To establish the level of compliance with corporate governance
guidelines in Tala Lya Mawogola SACCO in Ssenbabule District
To determine the relationship between corporate governance and
risks faced within the SACCO.
CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction.
This chapter looks at and reviews the various literatures on background of
SACCOs, challenges facing SACCOs as well as corporate governance, risks
and financial performance of SACCOs from authentic sources.
(among
minded and democratic financial institutions and traditionally savingsled. However, these very strengths could easily be impediments to the
effective governance that credit unions require to expand and
compete in the financial market place.
2.2 Environment surrounding SACCOs in Uganda
The liberalization of the financial sector by the Government of Uganda
and Its policy of prosperity for all led to establishment of SACCOs
(Mutesasira et al., 1999). Government has since adopted the strategy
of supporting these SACCOs in a bid to bolster the level of savings
mobilization and investment among the poorest of the poor. The
objective was to assist communities to start and operate these
institutions for financial service delivery at the sub-county and
subsequently at the parish level by supporting creation of new
SACCOs where they
existing but weak SACCOs, and supporting SACCOs that have attained
financial sustainability and that are willing to decentralize their
services to the parish level (MoFPED Report, 2005). In Uganda, the
SACCOs belong to Tier 4 in the Bank of Uganda (BoU) categorization
of financial Institutions. Tier 4 Institutions share two key features:
first, the BoU does not exercise prudential supervision over them,
secondly, they are forbidden to mobilize deposits from the general
public. They can accept only member savings (voluntary deposits and
share capital). SACCOs fall under the Uganda Cooperatives Act 1992,
which governs all cooperatives and which charges the Ministry of
Trade, Tourism and Industry (MTTI) with maintaining a registry of
cooperatives and overseeing their functioning and stability (CGAP
report, 2005). According to Kyazze (2010) SACCOs operate under a
generic cooperative law, shared with other cooperatives such as
growers, marketing and consumers and hence their unique needs as
financial institutions go unattended.
A large number of SACCOs were formed between 2001 and 2003
following announcements that the Government planned to inject USD
5,000 into each of Ugandas 5,000 parishes to support Tier 4
institutions. Many ceased operating, or never became active, when the
funding was not forthcoming (Goodwin, Bruett & Alexia, 2004),
(Kohler, Wolfgang & Winter, 2005). A research by BoU in 2007,
showed that two out of three SACCOs collapsed in the first or second
year due to poor governance, fraud and mismanagement, failure to
balance between social and commercial missions and inadequate loan
capital. Kairu (2009) agreed with the research by BoU, adding that
governance challenges existing among SACCOs in Uganda stemmed
from the fact that these SACCOs were faced with numerous
operational hurdles as well as regulatory issues as several of them had
collapsed only a year and half after inception.
Many SACCOs have fallen victim to poor management (CGAP report,
2006). Ssemwanga (2009) concurs with CGAP (2006) adding that in
the past, management of many SACCOs in Uganda was so poor that
most of them collapsed. Vices like conflict of interests, over
and
political
independence
needed
to
oversee
financial
intermediarys effectively.
According
to
Deshpande
(2006)
policy
frameworks
are
often
build
their
savings
and
access
credit
for
future
investments.
2.3 Risk
Deelchand & Padgett (2009) refers to risk as the variability of returns
associated with a given asset hence must be controlled or minimized. Pagach
& Warr (2008) pointed out that risk is generally considered to be the
advances,
the
financial
capacity
and
previous
borrowing
regularly
provides
opportunities
for
the
board,
CHAPTER THREE
METHODOLOGY
3.0
Introduction
This part presents details of the research plan information about how
data is to be collected, the study population, sample unit and design,
data collection instruments, and data analysis and data presentation
techniques.
to use logical
REFERENCES:
Allen, .E & Maghimbi, S. (2009) African cooperatives and the financial
crisis; CoopAFRICA Working Paper No.3
Appunyo, H. (2009, July 20). Lira SACCO Faces Audit over Impropriety.
The Daily
Monitor
publishers, Luxemberg.
Bagala, A. (2009, February, 6) Fake SACCOs Fail Prosperity for All
Programme, The
Daily Monitor.