FACTORS

INFLUENCING
INVESTMENT
IN
KENPIPE SAVINGS AND CREDIT CO-OPERATIVE
SOCIETY LTD, KENYA.

BETTY SYONGOMBE MUNYOKI

HD 231-2061/08

A research project report submitted to the Department of

Commerce and Economics in the School of Human Resource in
partial fulfillment for the degree of Bachelor of Commerce of Jomo
Kenyatta University of Agriculture and Technology.

APRIL 2011

DECLARATION
This research project report is my own original work and it has not been
presented in any other University for the award of a degree.

SIGN: ..................................................... DATE: ..................................

BETTY SYONGOMBE MUNYOKI
HD 231-2061/08

This research project report has been submitted for examination with my
approval as the university supervisor.

SIGN: ...................................................... DATE: .....................................

DR. L.A.OYUGI

ii

DEDICATION.
I dedicate this research project to my parents Mr and Mrs. MunyokiKanyi and
the entire Munyoki.

iii

ACKNOWLEDGEMENT.
Firstly, I would like to register my sincere and unreserved gratitude to my
supervisor Dr.Oyugi L.A. for his relentless support, charisma and inspirational
advice throughout this period. My family for their support and
encouragement.

iv

ABSTRACT.
SACCOs were first introduced in Kenya in 1964.Most were based on common
bonds linked to residence occupation and churches. There has been an
increased growth of Saccos since and as at 31st December 2009; there have
been 6500 active Sacco societies with a membership of about 4 million.
SACCOS have an asset base of over Kshs. 200 billion and a total savings
exceeding Kshs. 170 billion.
The main objective of the researcher was to identify and assess the factors
that influence SACCO investments in Kenya, come up with the most
important factors and make recommendations on how SACCOs can improve
in their investing techniques.
The data to be used in the study was both primary and secondary data.
Questionnaires have both structural and unstructured questions were used to
collect primary data while secondary data was obtained from statistical
abstracts and government policy documents.
Data analysis will be beneficial to SACCO management and its employees in
coming up with effective and efficient investment decisions and policies. The
study findings indicated that the organization is very keen in having a
versatile and flexible investment policy that is capable of adopting to the
changes and uncertainties associated with the market.
Finally, the study recommended Saccos investment policies should be
continually appraised and evaluated, Sacco needs to drastically change their
approach from welfare oriented institutions to a more business-like approach,
Saccos should develop internal performance indicators in curbing the
financial challenges that they are mostly faced and the government should
put in place measures that encourage Sacco investments, there application
and implication in the sector and laws to enforce them. Lastly, a further
study should be done on factor influencing Sacco investments on a wider
scale.

TABLE OF CONTENTS
Declaration.
...ii
Acknowledgement
....iii
Abstract

...iv
Table of content

...v
List of tables

.vii
List of figures

..xi
Abbreviation.

....x
Abstract
...xi
CHAPTER 1

....1
INTRODUCTION

..1
1.1 Background of the problem....
....1
vi

1.2 Statement of the problem ....

.....2
1.3 Research Objective.
......3
1.3.1 General objectives

.3
1.3.2 Specific objectives

.3
1.4 Research
Questions
...4
1.5 Significance of the
study....
..4
1.6 Scope .
....
..4
1.7 Limitations

.4
CHAPTER 2

...5
LITERATURE
REVIEW
..5
2.1 An overview of the co-operative sector..
......5
2.1.1 Historical background..
...5
2.1.2 Formalization

...5
vii

2.1.3 The birth of

Sacco
.6
2.1.4 The place of Saccos in the financial sector
inKenya......6
2.2 Saccos and investment
.
..7
2.3 Challenges facing Sacco
investment.
.8
2.4 Importance of investment policies
.....8
2.5 Variables influencing Sacco investments
.8
2.5.1 Safety

...9
2.5.2 Liquidity

.11
2.5.3 Yield

..11
2.5.4 Management versatility
....12
2.5.5 Membership confidence
...12
CHAPTER
3
14
RESEARCH
METHODOLOGY
.14

viii

3.1 Research design

....14
3.2 Target population

..14
3.3 Data description and collection
...14
3.4 Data analysis, interpretation and presentation
...14
CHAPTER 4

15
RESULTS AND DISCUSSIONS.
15
4.1 Background information ..
...15
4.2 investments made by Saccos
..16
4.3 Access to information
..
17
4.4 Variables influencing Sacco investments
..19

CHAPTER 5

20
SUMMARY, CONCLUSIONS AND
RECOMMENDATIONS..20
5.1 Summary

..20

ix

5.2 Conclusion.......
....21
5.3 Recommendation..
.22
5.4 suggestions for further research
..22
REFRENCES.

23
APPENDIX 1 ..
24
Introduction letter ...
..
..24
APPENDIX 2

..25
Research
questionnaire
..25

LIST OF TABLES
Table4.1Age and Level of Education........
...16
Table 4.2Experience of respondents....
...16
Table 4.3Types of investments .
17
Table 4.4
Sources of information .
..18
Table 4.5Influences extend.....
19

xi

LIST OF FIGURES.

Figure 2.1

conceptual

frameworks ..................................................................................13
Figure 4.1Experience of respondents
..15
Figure 4.2 The existence of Sacco investments and extend of
influence.15
Figure 4.3 Types of Sacco investments
..17
Figure 4.4 The level of access of information
18
Figure 4.5The extend of variables influence
18

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ABBREVIATIONS
CAPM Capital asset pricing model
FOSA Front office services activities
GDP - Gross Domestic Product
IFRS- International Financial Reporting Standards
KCC - Kenya Co-operative Creameries
KFA - Kenya Farmers Association
KPCU - Kenya Planters Co-operative Union
KUSCCO - Kenya Union of Savings and Credit Co-operatives
SACCOs Saving and credit cooperative societies
S &L-Savings and Loans
SASA - Sacco Savings Account

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