Research Journal of Economics & Business Studies - RJEBS - The ...

of Gohe cooperatives savings and credit union is showing positive growth trends at a decreasing rate.
The operating efficiency of the union and its ability to ensure adequate return to its members depends
on the profit earned by it. Profitability and sustainability reflects the ability of the union to continue
operating and to grow in future. This graph entails Gohe cooperatives saving and credit union is not
striving for the sustainability of profit growth trends as we have seen in the result the percentage
change in the year 1999 is 500.4% which shows higher change whereas, in the study period of 2000
and 2001 it is showing a decreasing trend this Lowers profitability resulting to diminishing ability to
provide for operational costs including staff wages and slow build-up of institutional capital. In
general, Gohe cooperatives saving and credit union financial performance in profitability reflects in
today's increasingly competitive environment, there is problem of marketing creatively in order to sell
the maximum quantity of financial products to members, ineffective management, lack of
accountability for adequate margins and lack of strict control over expenditures to maintain sustainable
sign of growth trends in profitability during the study period.
The capital needed for development and growth of a cooperative can come from three sources: the
members themselves, net surpluses generated by the cooperative, external finance such as bank loans.
The best source of financing for a cooperative is from members. The more financing members provide,
the less the cooperative business will need to borrow from other sources which helps to reduce the
costs of borrowing. The result Table 7, the members share capital growth indicates a positive change
but there is no sustainability on its growth although member shares capital are de-emphasized under
the WOCCU model, Gohe cooperatives saving and credit union does not maintain a dependence on
shares for growth but there is a signal of dependence problem on the year 2000 which shows 63.94%
growth trend and in the rest of the study period shows the same growth trend. If sing of growth trends
in this area are excessive, it usually signals an inability of the Gohe cooperatives saving and credit
union to adapt to the new system of promoting deposits over shares. So that as result of the study
though it couldn’t maintain growth sustainability Gohe cooperatives saving and credit union is in a
safe place as to level of members shares. As stated earlier, the WOCCU model, under the new
capitalization system, growth on member shares capital are de-emphasized and it should be replaced
with institutional capital this due to the fact that this capital never exists if the member leaves the
union. In general, Gohe cooperatives saving and credit union shows the sign of quality members’
shares capital growth trend as per WOCCUs model though in the year 2000 the sign of growth trend of
is very high and unable to show sustainability during the study period.
Institutional capital growth is the best indicator of profitability within saving and credit unions. A
static or declining growth trend in institutional capital usually indicates a problem with earnings. If
earnings are low, the saving and credit union will have great difficulty in adding to institutional capital
reserves. One of the indisputable signs of success of a robust saving and credit union in transition is a
sustained growth of institutional capital, usually greater than the growth of total assets. As we have
seen on Table 7, the growth trends of Gohe cooperatives saving and credit union was showing a
declining rate in the study years which suggests that Gohe cooperatives saving and credit union is
unhealthy in its institutional capital growth. Here except year 2000 the growth trend of institutional
capital is lesser than the growth of the total assets in the rest of study periods. Particularly in the year
2001 it indicates negative growth trend which implies the union is not in a position to finance nonearning
assets from its institutional capital, unable to improve earnings and absorb losses and sufficient
capital is unavailable implies, the Gohe cooperatives saving and credit union is forced to use more
expensive deposit savings or member shares to finance its fixed assets requirements and abnormal
losses.
Since, the only successful way to maintain asset values is through strong, accelerated growth of assets,
accompanied by sustained profitability. Growth in total assets is one of the most important ratios.
Many of the formulas used in the PEARLS ratios include total assets as the key denominator. Strong,
consistent growth in total assets improves many of the PEARLS ratios. By comparing the growth in
www.theinternationaljournal.org > RJEBS: Volume: 02, Number: 06, April-2013 Page 67