EFFECT OF LOW-COST STRATEGY ON THE FINANCIAL PERFORMANCE OF SACCO’S IN NAROK TOWN, KENYA

Abstract

ABSTRACT DOI No: 10.36713/epra14794 Article DOI: https://doi.org/10.36713/epra14794 Developing Savings and Credit Cooperatives (SACCOs) in Kenya has proven remarkably fruitful. Recognized by the World Council of Credit Unions as the most robust in Africa and the seventh fastest-growing globally, Kenya's SACCO sector has witnessed a surge in participation, resulting in heightened competition. Although past studies have delved into the impact of low-cost strategies on SACCOs' financial performance, research specifically centered on Kenyan SACCOs are still limited. In response to this gap, this study sought to investigate the influence of low-cost strategies on the financial performance of SACCOs in Narok Town, guided by Michael Porter's theory. Employing a descriptive research design, the study focused on ten registered SACCOs in Narok Town, Kenya, with the study's respondents comprising the board of directors and the branch managers of these SACCOs. The study used a census approach to determine a sample size of 100 respondents, and data analysis encompassed both descriptive and simple linear regression model. The results indicated that low-cost strategies have an effect on financial performance of SACCOs in Narok Town. It was concluded that low-cost strategies manifested interest rates, operation efficiency, low transactional cost, economy of scale plays a critical role in augmenting the financial performance of SACCOs in Narok Town. hence it was recommended that…to enhance the financial performance of SACCOs in Narok town there is need to embrace low cost strategies. KEYWORDS: Savings and Credit Cooperatives (SACCOs), World Council of Credit Unions, Low-cost strategies, financial performance and Michael Porter's forces.