The Effect of Regulations on Enhancing Investment in Public Transport Sacco’s in Nairobi County

Abstract

This study will seek to find out the effects of regulations on enhancing investments in public transport Saccos in Nairobi County. The study will also seek to find out recent changes in operation of public transport in Kenya for example new vehicles on the road, new safety rules and the registration of co-operative societies to replace the Matatu Welfare Associations in a new development which started from early 1990’s. Cooperatives are economic units by which members mobilize their financial resources through savings. It is estimated that this sector contributes about 20% to the gross Domestic Product. Although this sector is considered both economically and socially important, sectoral report indicates that nearly 2% of savings and Credit Cooperative Societies (SACCOs) collapse every year and about 6% of registered members withdraw their membership annually. Some SACCOs pay dividends which are as low as 3.5%. It is not clear why there is a deteriorating trend in most of the societies despite government’s financial regulations being in operation since 2004 that were meant to help SACCOs achieve sustainability through growth and financial stability. The objective of this study was to assess the effect of government’s financial regulations on investment performance in SACCOs in Nairobi County. The study adopted descriptive research design and purposive sampling method. The research adopted a self administered questionnaire which was used to collect quantitative data. The study units comprised 104 sacco societies of public transport in Nairobi County. The questionnaire was designed based on a Five Lickert scale. However, only 95 Saccos were actively in operation. The other 9 were either dormant or inactive. Therefore, 87 Saccos were randomly sampled and studies. The findings show that government financial regulations have been moderately regulated with a weighted mean of 2.805. Concerning the approval of maximum borrowing powers by members, a weighted mean score of 3.816 on the scale was posted. It is therefore expected that with this large extent of implementation of this regulation, Saccos will have a strong financial stability since they will have fewer loans to service. The study also

found out that performance of Saccos in terms of efficient and prompt disbursement of loans is quite wanting with a weighted mean score 2.0919. Key recommendations were to the Ministry of Co-operative Development to mobilize resources to educate the members and management committees of the societies for better performance, and adherence to the regulations laid down by the government.