May-June-issue

Economy
financial obligations among others. It
is against this insight the paper will
examine the effect of SASRA Act on the
liquidity of SACCOs in Kenya.
1.3 The international context
International organizations are coming
to the realization that SACCOs are
veritable and effective channels to
ensure Programme implementation
effectiveness, particularly in poverty
alleviation projects and firsthand
knowledge of the needs and interest of
the poor (Okumadewa, 2016). According
to Chossudovsky (2016), the World
Bank Sustainable Banking with the Poor
project (SBP) in mid-2014 estimated that
there were more than 1,000 SACCOs
in over 100 countries, each having a
minimum of 1,000 members and with 3
years of experience. In a survey of 2016
of such institutions, 73 per cent were
NGOs, 13.6 per cent credit unions,
7.8 per cent banks and the rest savings
unions. An overwhelming majority of
the world’s poor live in the third world
countries. Various approaches have been
employed in alleviating poverty of which
provision of credit that targets the poor
is one. Many are now of the opinion that
allowing the poor to have command over
resources through credit can contribute
In the world of
volatile cash
movements and
increasing global
lending and
borrowing of funds,
few SACCOs if any
remain unaffected
by borrower’s late
and nonpayment of
loan obligations.
This result from
the SACCO’s
inability to collect
anticipated
interest earnings
as well as loss of
principal resulting
from loan defaults.
towards poverty alleviation.
As Jared, Charles and Willy (2016)
asserts, the rapid growth of the SACCO
movement in Kenya can be pinned on
the fact that they have for long periods
specialized in offering cheap loans at an
‘affordable’ repayment history to their
clients. This gesture has attracted an
exodus of clients from the formal financial
institutions such as banks seeking their
services (ACCOSCA, 2012). Some
SACCOs in Kenya have adopted Front
Office Services Activities (FOSA) to
offer the services they render to clients.
FOSAs have proved to be one of the key
profit centers for SACCOs and members
have appreciated the services offered by
these FOSAs.
Through the full utilization of the
FOSA network, SACCOs provide
their members with the full range of
basic financial services and consolidate
these services to the full satisfaction
of members. The introduction of
FOSA has contributed positively to
the performance of SACCOs through
improved profitability which has led to
the declaration of a high dividend rates to
the members (ICA, 2017).
Mwaura (2015) insists that lack of
credit follow up, credit analysis, and
hostile lending of money are some of
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