Strategic positioning and profitability of savings and credit co-operative societies in western Kenya.

Abstract

Despite the increase in the membership of SACCOs according to the Statistical reports given by the SACCO Societies Regulatory Authority, SASRA, a state corporation established under the SACCO Societies Act (Cap 490B) of the Laws of Kenya, the rate at which SACCOs are closing down their operations is high. Some of the probable causes include poor saving culture among members, corruption and embezzlement of funds, political interference, and competition from established from established financial institutions, high default loan repayment rates, lack of qualified personnel, inadequate financial resources, and insufficient technological advancement. Scholars have attempted to make research inquiries into the problem facing SACCOs in Kenya, but much has been concentrated in various regions except Western Kenya. This study purposed to investigate strategic positioning and profitability of Savings and Credit Co-operative societies in Western Kenya. The study was guided by the following objectives: to examine the effects of branding strategy, Pricing Strategy, Customer Service and Technological Capabilities on profitability of SACCOs in Western Kenya. The study was anchored on Schumpeterian Theory. The study employed descriptive survey research designs. The target population of the research consisted of Board of Management, Managers, SACCO Staff and Members who totaled to 150 drawn from 8 selected high performing SACCOs in Western Kenya. The sample size of 109 was drawn from the population. Purposive sampling was used to select Board of Management, and Managers while Stratifies sampling was used to select members of SACCOs. and purposive sampling techniques were used to select the respondents. Data was collected using structured questionnaire and then was analysed using descriptive statistics where findings were presented in frequencies and percentages, in tables. In the findings, 80.8% of respondents indicated that SACCOs that merged acquired skilled labour, reduced cost of operations. Over 80% of respondents observed that their SACCO Staff worked to fulfil SACCOs Vision. Further, 67.9% of respondents stated that their SACCOs took pride in giving high dividends on savings and levied low interests on loans secured. In another case, 68.8% of respondents indicated that their SACCO prioritized members while 88% of respondents noted that SACCO transactions were systematic and computerized. In the inferential findings, the correlation between strategic positioning and profitability of SACCOs was 0.633, branding strategy, pricing strategy, customer service, and technical capabilities had statistical effects on profitability of SACCOs; therefore, the null hypotheses were rejected. It was recommended that SACCOs should engage in various forms of branding strategy, embrace cost-leadership strategies, integrate the technology in operations and train its staff to improve service delivery. SACCO’s will use findings from this study to develop plans meant to improve their operations in terms of cost minimization, effective customer service, adoption of new technology branding and product differentiation strategies as they relate to improved profitability. KUSCCO, Central Bank and Parliament can use findings or recommendations from this study to formulate policies that would help SACCOs sustain their operation amid tight market competition. The findings of the study will be important to the SACCO movement and its stakeholders especially in enhancing profitability of the SACCOs. The information from the study will also be significant to researchers as it will form a basis for further study on the strategic positioning and how it affects profitability of SACCOs in Kenya and globally.