Abstract:
This study was aimed at establishing the challenges facing deposit -taking
Savings and Credit cooperative societies in complying with their regulatory
requirements as provided for in Kenya with a particular focus on Gusii region
which encompasses Kisii and Nyamira counties. Various players in the financial
sector are under regulatory oversight that is vested in the various Authority arms.
These financial institutions include listed companies under the CMA, insurance
companies under the IRA, the Retirement funds under the RBA, the commercial
banks which form the largest subpart of the financial institutions being regulated
by the Central Bank of Kenya and lately the SACCO Societies have been under
regulation since December 2008 being the latest to be brought to the regulatory
fold under the SASRA. This is a sector that had not been under regulation up till
2008 and given that they have been recently brought under regulation, there
appeared to be challenges facing these institutions in meeting their regulatory
requirements and the purpose of this study was to explore the various challenges
in a bid to find out the possible solutions to the same. The objectives of this study
included determining the challenges facing SACCOs‟ regulatory compliance in
Kenya. The research was carried out using various methodologies which included structured questionnaires, interviews, observations, focused discussions with
selected persons and available documentation in the selected institutions. The data
in this study was analyzed using statistical package for social sciences. The study
found out that the various challenges facing compliance in these institutions
included non-separation of shares from deposits, high dependence on short-term
external borrowing, lack of liquidity monitoring system, high investment in non-
earning assets, inadequate ICT system, inadequate managerial competencies and
political interference among others. The study realized that even with the
challenges opportunities were available for compliant Saccos including capital
accumulation and agency business largely arising from access to Government
funds for on-ward transmission to youth and women groups. The findings of this
study are important for the particular organizations under study to address the
challenges so as to improve regulatory compliance, the industry to anticipate and
endeavor to overcome the challenges and also aid the regulatory Authorities to
enhance on their mandate.
