Factors Affecting Revenue Growth of Savings and Credit Cooperative Organizations in Kenya

Abstract

Savings and Credit Cooperative Organizations (SACCOs) fulfill an indispensable role in providing financial services to their members, especially those who have restricted access to conventional banking facilities. In order to ensure the long-term viability and efficient delivery of services, it is imperative to comprehend the factors that determine revenue growth in SACCOs. This study aims to investigate the effect of loan default, operating costs, and membership size on the growth of revenue within the unique context of SACCOs. Through a meticulous examination of the existing literature, it becomes evident that loan default poses a significant challenge to SACCOs, resulting in substantial financial losses that have a direct impact on the wealth of the members. Furthermore, operating costs emerge as another critical concern, as they can impede profitability when SACCOs turn to expensive short-term borrowing from banks due to limited capital availability. Moreover, the size of the membership base plays a substantial role in influencing revenue growth. A larger membership base offers the potential for increased revenue generation through registration fees and additional savings, thereby enhancing the overall financial performance of the SACCO. The findings underscore the need for tailored strategies informed by the specific context, regulatory environment, and member requirements.