Governance in Saving and Credit Associations Operating in Addis Ababa
No Thumbnail Available
Date
2017-01
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
Corporate Governance in Saving and Credit Cooperative Societies (SACCOs) is pivotal for such
institutions having a peculiar nature of member-owner attributes. This study aimed at the
assessment of governance practices in SACCOs. The study has targeted on three functional
SACCOs in Addis Ababa of Ethiopian Electric Power Corporation (EEPCo), Ethiopian Airports
Enterprise, & Catholic Relief Services. Purposive sampling techniques were used to gather data
from the selected SACCOs. Pertinent data were collected through primary data sources using
structured questionnaires and secondary data sources. Data collected has been entered, edited
and analyzed using SPSS tool. Based on the study, there are no consistencies as to ownership
within the SACCOs. The Board size ranges from seven to nine members in these SACCOs with
limited representation of female members at around 30% of total board size.
The study
identified challenges in conducting periodic meeting and performance assessments at Board
level. Annual audits in the SACCOs were not conducted timely after closure of a fiscal period.
Trainings related to governance and management of SACCOs was not adequately provided to
Board members. Incentive schemes either in cash or in kind for Board members are poor, if not
none at all like at CRS. SACCOs mostly pay an annual interest rate of 5% on saving depositors
which is the risk free market rate offered in most commercial banks on saving accounts. Interest
rate on loans of the three SACCOs remains stagnant ranging from 6% to 8% which doesn’t
consider at least yearly inflation and time value of money. Finally, it is commendable to consider
on a clear definition of ownership, improving capital adequacy position, periodic and timely
supervision and audit, strengthening sound financial discipline in optimal utilization of huge
savings mobilized to productive loan portfolios and better investment opportunities. It
necessitates revisiting interest rates both on savings and loans to reflect administrative costs,
cost of funding, inflation and elements of capitalization
Description
Keywords
Associations operatin