THE EFFECT OF REGULATION BY SASRA ON PERFORMANCE OF SMALL SACCOS IN KENYA

Abstract

A Sacco society is defined as a user-owed, user-controlled business that distributes benefits based on patronage. Direct government regulation of Saccos came about through legislation enacted by the Kenyan parliament, the Sacco Act of 2008. The regulations were necessitated by the need to give proper structures and prudential standards to Saccos especially those involved in deposit taking activities referred to as FOSAs and after the pyramid scheme saga. The FOSAs carry out banking business with members of the public most of whom are not their members. Since the Saccos were not regulated by central bank or the Banking Act, the government forged direct regulation through Sacco Society Regulation Authority. This study hence sought to find out the effect of statutory deposit, management qualification and quality and membership regulations requirements on the performance of small Saccos. The study was based in Kenya and targeted small. Survey research design was used. Data was collected by use of structured questionnaires. Respondent comprised of Small deposit taking Sacco staff. The data collected was analyzed through descriptive and inferential statistical techniques. The findings were that Sacco performance will improve with implementation of the Sasra regulation. Statutory deposit regulation will highly affect Sacco liquidity, members also showed confidence in qualified managers based on performance but felt that membership regulation is punitive. In conclusion the regulation has positive effects on Saccos and hence we recommend compliance by Saccos to the regulations.