The role of informal microfinance institutions in saving

It further defines savings and credit cooperation societies (SACCOs) in the following manner:-
� A financial enterprise Controlled by an association of persons.
� An association composed of savings and borrowing co-owners.
� A financial enterprise with objectives different from those of a bank that seeks to
maximize the cooperative advantages of its members through saving/ borrowing
schemes.
� An enterprise operated through special laid down rules.
Development International Desjardins (2005) further distinguish two types of SACCOs
according to their membership status. These are SACCOs with a homogeneous membership i.e.
Members belonged to the same social category and SACCOs with a heterogeneous
membership i.e. members not belonged to the same social category.
2.1.2 The concept of portfolio investment.
Investors, whether firms or individual invest their funds/money or resources on the
expectation that in future, they are going to receive back their money (on the selling the
investment) plus additional amount known as a return at a certain time or intervals of time
and less risk. A return is income and a change in market price of the investment that an
investor receives from investing his funds into different types of investment. A return may be
dividends, interest or profit, or else depending on the nature of the project where the fund is
invested. Other factors affecting decisions of investors in relations as to where to invest his
funds are: - liquidity, marketability, time value of money, profitability and risk of the
respective projects where the fund will be invested.
A return may be measured either as under a condition of certainty or under a condition of
uncertainty. When the condition is deemed as uncertainty, a return is measured as the average
return obtained by summing the outcomes of returns which are then multiplied by their
respective probability of occurrence. On the other hand, the rate of return refers to the return
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