The challenges facing deposit- taking savings and credit cooperative societies' regulatory in Kenya. A case study of Gusii RegionN

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.