CHAPTER ONE

1.0 INTRODUCTION

1.1BACKGROUND

Baraton SACCO society limited was incorporated on 1985 September 23, under co-operative
society Act No. 12 of 1997 which was amended in 2004.it started its operations the same year
with 53 members, with a compelling economic objectives of mobilizing members savings to
provide financial support to the members. Whereby it started accepting deposits from members
and granted those loans at a reasonable rate of interest in times of need. It has the responsibility
to their members to run daily operations in responsible manner that protect members deposit and
the integrity of the institution. A best practice in its operational standards includes; adherence to
generally accepted accounting principles, transparency in accounting and operations and
implementation of internal control policies and procedure that protect the institution against
employee and members risk.
The Sacco has bylaws that contains;

 Names, Address and Objectives of the society

 Name, Address and occupation of members

 Share capital and its dimension

Characteristics of Baraton Sacco society ltd

 Membership of Baraton Sacco society ltd is open to all Baraton employees who have a
common interest. The Sacco’s are required by SASRA to have minimum of ten members
at it has not specified the maximum number.

 Members join the Sacco voluntarily i.e.by choice whereby a member can join the society
and withdraw its membership at wish.
 The Sacco is regulated by the Sacco society regulated authority (SASRA) which is give
mandate by the ministry of co-operative and development.

 The Sacco’s capital is contributed by all members through their savings and the interest
on loans.

 The Sacco is managed by board of directors which are the elected representative of the
member’s interest.

 It provide products and services to members and non- members through front office
services activities (FOSA)

 Dividends are distributed according to shares held by each member.

Baraton Sacco divisions

The Sacco has two divisions i.e.

 Back office services activities (BOSA)

 Front office services activities( FOSA)

The back office services activities section is for Baraton Sacco members, these are the
shareholders of the Sacco. They earn dividend from their shares and interest on the deposit.

They get loans three times their deposits which payments are made through a check off
system in the University, same as their monthly contribution.

The front office services activities section was started by the Baraton Sacco on April, 2009,
and it is the banking section of the Sacco where members, student, staffs, entrepreneurs,
casual workers and the general Baraton community make their savings and other banking
services such as

 M-pesa
  Salary processing etc

Baraton SACCO Objective to its members

 To provide a safe and convenient place to save their money whatever amount they
can afford.

 To provide loans to its members

 To provide financial counseling

 To provide member education

Baraton SACCO philosophy and principles

 Equality: The idea that everyone has the same right or equal

 Equity: The idea that refers to fairness, justice and honesty, proportional distribution
of something equally.

 Mutual self help: The idea that people are the masters of their own destiny through
working together as a group.

Principles:

 Voluntary

 Democratic member control

 Member economic participation

 Autonomy and independence

 On going education, training and information

 Concern for community

 Building financial stability

  Corporation with other co-operatives

Mission

The mission of the Baraton SACCO society limited is to be a model SACCO that efficiently
mobilizes resource endowment through savings, credit and investment for holistic and
empowerment of one and all our membership family.(prospectus).

Vision

The vision of the Baraton SACCO society limited is to be a world class SACCO, excelling in
stewardship of members resources.

Core values

The core values of the Baraton SACCO society limited are; they espouse, cultivate nurture
and uphold integrity, temperance, equity, honesty, respect, prudence, fairness, and efficiency
and accountability practices for the common good of all in all.

Motto

The motto of the Baraton SACCO society limited is ‘together we grow’

1.2 STATEMENT OF THE PROBLEM

1.3 OBJECTIVES OF THE STUDY

1.4 RESEARCH QUESTIONS

1.5 SIGNIFICANCE OF THE STUDY

The results of this study may be useful to:

It will enable researchers to have a closer look on how public perception influences Baraton
SACCO services and SACCOs in general.

It is hoped that this proposed study will make some contribution to the existing knowledge in the
wide, broadening and ever dynamic field of SACCOs. Although several studies have been
conducted on factors that influence SACCO services, little attention has been paid to public
perception on services.

It is also expected to add knowledge to the wide field of Sacco’s management. As such,
manager will (incomplete)be able to know what basis they would give advice in services for
public.

It will be useful to micro- financial advisors considering how the public’s perception can
influence services decisions.

1.6 DELIMITATION OF THE STUDY

.

1.7 HYPOTHESES

1.8 DEFINITION OF TERMSa) SACCO

CHAPTER TW0

2.0 LITERATURE REVIEW

2.1 WHAT ARE SACCOs

Savings and Credit Cooperatives are Associations of people who have come together with
common goal/ s geared at improving their livelihood economically. They are an important part of
the financial sector in Kenya, providing savings, credit and insurance services to a large portion
of the population.

It is the government of Kenya’s commitment to establish SACCO legislation, implement

international financial performance standards and begin supervision of SACCOs in Kenya that
provides the incentive for improvement of SACCO management and performance.
Co-operatives have played an important role in the development of the economies of Kenya have
led to the uplifting of the standards of living of the people.

2.2 SACCO SOCIETIES REGULATORY AUTHORITY (SASRA)

It was established under the Act is mandated to implement the new law to foster growth, safety
and financial soundness of the Sacco subsector thus positioning it to play a more significant role
in economic development by enhancing financial access to the many Kenyans who have no
access to financial services.

The Regulations provide a generous translational period of four years within which a licensed
Sacco will fully comply with the prudential standards on capital, investments, non productive
assets and external borrowing. Sacco leaders are therefore advised to guide their Sacco
appropriately because failure to apply by June 2011 implies that the Sacco does not intend to
continue operating FOSA

Licensing marking the beginning of supervision through off site and on site surveillance to
ensure that SACCOs adhere to the operational regulations and prudential standards as stipulated
in the law. This will enhance accountability and transparency, the hallmark of good governance
which is a prerequisite for deposit taking financial institutions. The challenge to you is to
translate this regulated status to drive growth through appropriate business strategies.

Regionally, Kenya’s financial sector is ranked highly and so is the Sacco subsector. SASRA
aims are to strictly enforce the Act and Regulations to entrench good governance practices,
operational and financial management systems that promote sound financial and business
practices in the Sacco subsector. This will promote member confidence opening growth
opportunities for Saccos that provide demand driven financial products and services. Towards
this end, the Authority will pursue strategic partnerships with financial regulators in Kenya and
beyond, as well as development partners to learn and benchmark with the best international
standards and practices.

All licensed Sacco societies are required to join the Deposit Guarantee Fund (DGF) once
established. The SASRA has commenced the process of setting up DGF and will soon coordinate
the licensed Sacco Societies to nominate four persons to be appointed by the Minister to the
Board of Trustees. The purpose of this Fund is to compensate the depositors in the event that a
Sacco fails.

The law requires that all Sacco Societies that operated Front Office Service Activity (FOSA) at
the date the Minister published the Regulations make application for license by June 17th 2011.
It is emerging that once a Sacco has been granted the letter of intent, the applicants move fast
because they have been conducting deposit taking business hence the necessary physical
infrastructure and information management systems are in place and only requires upgrades to
comply with the regulatory standards. This has not only shortened the turnaround time but also
lowered the regulatory costs for most of the Sacco societies.(speech 4/3/2011 inaugural license
ceremony by Mr. Carilus Ademba HSC,chief executive officer, SASRA)

2.3 THE CONCEPT OF CORPORATE GOVERNANCE

Corporate Governance is defined as the system by which a corporation is directed, controlled and
held to account for the manner in which power is exercised in the stewardship of its assets and
resources to increase and sustain shareholder value and satisfy the needs and interests of all
stakeholders.

Governance Problems at Co-operative Level

i) At Board Level

The Board oversight and management operational responsibilities are inadequately defined in the
by-laws of Co-operative Societies. The major concerns include:

 Key decisions on urgent matters such as change in interest rates, introduction of new
products and services have to await approval by the Annual General Meeting.

 Elected Board members are frequently non-professional volunteers yet they assume
highly technical responsibilities such as loan analysis and disbursement, budgeting and
financial expenditure control.

 Lack of clear guidelines on where, for example the Credit Committees authority ends and
where the Executive Committee begins, and where the staff members authority begins
hence delayed decision making.
 Over-reliance on guidelines or circulars from the Commissioner’s Office that are obsolete
or may not apply across the board for all types of Co-operatives.

 Board members succumbing to political pressure from external forces to implement

activities that counter the management ethics and standards.

 Corruption, gross mismanagement and misappropriation of funds by some elected official

who abuse the trust of the members and deny them the hard earned funds.

 Unrealistic office tenure that ends up being costly in mainstreaming governance

interventions in respect of training and instilling professionalism.

 Failure to convene general meetings and hold elections when due in some Co-operative
Societies and the refusal of some officials to vacate office after being duly voted out by
the members in their general meetings.

 Financial considerations on the fact that some members are outspoken has at times led to
the incompetent members being elected into leadership positions and at the detriment of
leaders who are visionary, hardworking, honest and competent.

 Leadership wrangles and endless litigations due to conflicts that end up leading to
wastage of resources and loss of focus in terms of the sound development of the Co-
operative.

 Illegal expulsion of members perceived to be trouble makers.

 Illegal and unauthorized investments.

 Reluctance to acknowledge need for change and competencies are unsuited to strategic
challenges and leadership roles.

 Board members and Supervisory Committee may collude to protect one another’s
interests, e.g. insider loans and high managers’ salaries.

ii) At Staff Level

 Job insecurity due to changes in the Board members and weak terms and conditions of
service lead to poor performance.

 Unprofessional process of recruitment that encourages, favourism, tribalism, and

nepotism sometimes attracts incompetent personnel. There have also been instances of
illegal dismissal of employed staff.

 Absence of appropriate personnel and administration policies and Accounting Procedures

Manual, job descriptions and specifications and performance appraisal tools compound
the problems of governance.

 Lack of adequate controls leading to a fertile ground for fraud in some of the

Co-operative Societies.

 Lobbying and canvassing for the election of certain Board members who may be
relatives, friends or appear to favour their working arrangements at the detriment of the
functioning of the Co-operative Society.

 Lack of direct control of the Organization by the members has led to a situation where
some managers do business diversification that does not benefit the owners but meant for
their own interests.

iii) At Member Level

 Inadequacy of resources, lack of Education and Training force members to exert pressure
on the Board members to implement issues in a manner that abuses the spirit of good
governance.i

 Salaries for the staff are not competitive as those paid to other financial institutions
because members reject offering salaries that appear higher than what they earn from
their employers, trade or businesses. Therefore attracting and retaining better qualified
managers and staff is difficult.

 Where a Co-operative is very large, members may fail to look closely at the prudential
actions of their Board members. In some cases, where a Co-operative is under the
 delegates system as opposed to general membership, the delegates end up expressing
their own views as opposed to those of their members.

 The one member one vote principle at times undermines the genuine concerns of the
minority. The academic and patronage criteria are at times overlooked for other minor
considerations.

 Physical confrontations of members in some Co-operatives.

 Split of viable Co-operatives into small uneconomical units.

Aims and pillars of Good Corporate Governance

Good corporate governance aims at achieving:

 Increased profitability and efficiency of business enterprises.

 Enhanced ability to create wealth for shareholders.

 Increased employment opportunities with better terms of workers.

 Enhanced separation of ownership from control.

 Viability in corporations for investment in a competitive global market.

 Enhanced legitimacy, responsibility and responsiveness of the business enterprise.

 Transparency, accountability and probity of business enterprises.

CORE PRINCIPLES IN THE EAST AFRICAN CODE OF BEST PRACTICE

The following are the seven principles of Co-operation applied in mainstreaming governance in
the Co-operative Societies:
  Voluntary and open Membership

 Democratic Member Control

 Economic participation by Members

 Autonomy and independence

 Education, training and information

 Co-operation among Co-operatives

 Concern for community in general

IMPORTANCE OF GOOD CORPORATE GOVERNANCE PRACTICES

They facilitate achievement of the following in the Co-operative Societies

 Strategic thinking and strategy setting

 Balance of power and control

 Efficiency and effectiveness

 Transparency and probity

 Productivity and responsiveness

 Responsibility and receptiveness

 Creativity and innovativeness

HISTORY OF THE SACCO MOVEMENT

IN THE WORLD

In 1849 in Germany Herman Schulze and William Raiffersen started the first savings and credit
cooperatives to assist people overcome economic problems during the time of famine that was
there that time.

In 1850 in England workers in a mill factory started savings and making loans to help each other.
In 1901 SACCOs spread to the North America first to Canada by Alphonse Desjardine and then
to the U.S.A by E. Filen a Boston Merchant for his employees.

In 1970 the world council of credit union(WCCU) was formed with their headquarters in
Madson Wisconsin, USA to provides an international forum for discussion and association
provides assistance to new and developed movement, offers insurance and training of a large
scale.

IN AFRICA

In 1965 the Africa confederation of cooperation society savings and credit association was
formed in Nairobi Kenya as pan Africa body. It was formed to promote the SACCOs principles,
provides a forum for discussion, offer insurance to SACCO members on life savings and loan
protection and educate affiliate members on a wide variety of credit union issues.

SACCOs IN KENYA

History

The Cooperative movement in Kenya dates back to 1931 when the first ordinance to regularize
the operations of the cooperatives in the country was enacted. The following decade witnessed
increased intervention in the sector with the eventual enactment of the Co-operative Ordinance
Act of 1945, the predecessor of the current Co-operative Societies Act, Cap. 490 of the laws of
Kenya - as amended in 1997.

Savings and credit cooperative societies (SACCOs) are registered and regulated under the Co-
operative Societies Act. For registration the Act requires a primary society to consist of at least
10 persons and have the following objectives:
i) Promote the welfare and economic interests of its members.

ii) Incorporate in its bylaws of the following cooperative principles:

 Voluntary and open membership;

 Democratic control of membership;

 Economic participation by members’

 Autonomy and independence;

 Education, training and information;

 Cooperation among cooperatives and

 Concern for the community in general;

SACCOs are accorded the same treatment as producer or marketing cooperatives, and to qualify
for registration they are not required to raise any capital. Also, a SACCO needs no license to
commence trading, whether offering back-office or front office services (banking services). Once
registered, the SACCO has to operate according to the following aspects of prudential
management of societies as provided for in the Act:

 No member other than a cooperative society shall hold more than one – fifth
(20%) of the issued and paid – up capital for any cooperative society.

 Books of accounts must be kept and audited every year by an external auditor
appointed at the annual general meeting.

 The registrar can carry out an inquiry or inspection of a cooperative society at the
expense of the society.

The Ministry of Cooperative Development has developed guidelines that contain detailed
operational requirements for the SACCOs to follow. The societies also prepare and submit
monthly reports to the Ministry. In addition, in conjunction with the Rural Banking Project , an
inspection team has been put in place, which monitors whether the societies are operating under
sound banking principles.

Section 43 of the Act prohibits a Cooperative Society from giving loans to non – members,
unless the by-laws of the society provide for giving such a loan. Therefore the law gives
SACCOs the leverage to develop a policy framework for lending to non-members. In rural areas
a cooperative society may receive deposits and loans from persons who are not members on such
conditions as its by-laws or rules under the Act may prescribe.

FORMATION OF SACCOs

The vast number SACCOs in Kenya have been formed over the years.

The SACCOs target a specific segment of population with similar orientation or with similar
preoccupation. They are mainly low-income earners and the Society has objectives of uplifting
their financial status. There are some SACCO’s that target community members in general
because of the virtue that they belong to that particular community whereas there are others who
are more specific, their members have to come from a certain clique.

The main requirement across all SACCOs is that their members have to have some source of
income before qualifying to join the SACCO’s. The SACCOs mobilize funds from them and
give them access to financial services like loans, savings facility, front office services which is
other wise in accessible to them through the main banks that are there either because they are
unaffordable or physically inaccessible.

TYPES OF SACCOs

Three types of cooperatives are recognized in the Act;

 Primary Cooperatives,

 Cooperative Unions
  Apex Cooperatives. SACCOs fall in the category of Primary Cooperatives.

SACCO CURRENT STATUS

Cooperatives can provide financial services to their members through existing product or
marketing societies, SACCOs and the Co-op Bank. Members also have the opportunity of saving
with their marketing societies through banking sections of the district cooperative unions, which
maintain savings account for their members.

The 1997 amendments to the Co-operative Act, Cap 490, enabled SACCOs to make investments
without approval from the Ministry of Co-operatives. This has greatly removed bureaucracy
from the day-to-day operations of the societies but has increased the risk of making unsound
investments. Already some SACCOs have suffered in the recent bank crisis.

The Ministry of Co-operatives is ill equipped to develop guidelines for SACCOs or to carry out
effective supervision. Countries where SACCOs are allowed to take deposits and offer banking
services place them by law under the auspices of the Central Bank and the Ministry of Finance.
For example, credit unions in Burkina Faso are licensed and regulated by the Central Bank.

SACCO NUMBERS AND SPREAD

In a survey carried out by KIPPRA, it emerged that, as at 31 December 1997, there were 3,169
SACCOs, with a membership numbering 4.85 million. Table 1 shows the distribution of
SACCOs by province. The data provided in this table is however misleading because the urban
SACCOs also serve many employees of public institutions and government ministries whose
SACCO headquarters may be in Nairobi but where many of its members are working in other
urban and rural bases throughout the country. This would explain the difference in numbers in
table 1.provincial distribution of SACCOs

Type of Coast Rift Nyanza Nairobi Eastern North Central Western Totals
SACCOs valley eastern

Rural 4 58 8 - 11 - 13 - 94

Urban 316 28 109 1249 92 8 266 72 2140

Totals 320 86 117 1249 103 8 279 72 2234

As at 31 December 1997, savings through SACCOs stood at Ksh 29 billion and the outstanding
loans amounted to Ksh 22 billion. The loans to deposits ratio were 74%, which demonstrates the
effectiveness of the SACCOs as a financial intermediary.

In another baseline and socio-economic survey carried out on behalf of COFEP between 21st July
2003 – 14th August 2003, came up with the following number of SACCOs.

SACCOs spread
Financial institution
 Rural SACCOs 136

 Urban SACCOs 3074

 Totals 3210
As at 31st December 2004, there were 4,000 active SACCO Societies with a membership of
about 3.0 million. The share capital and deposits stood at Ksh 94 billion while the loans
outstanding were Ksh. 64 billion. Reserves amounted to Ksh 3.0 billion. In view of the varied
activities in the country, we now have salary based, rural and traders SACCOs. There is also Jua
Kali, transport and community based SACCOs.

SACCO OPERATIONS

Product and Services Offered

Through mobilization of funds the SACCOs in Kenya offer the following services to its

Members:

 Loans

 Deposit & Savings facility

 Front office services

 Cheque Clearing Services

The most common product offered throughout the SACCO fraternity is the Credit and Loan
services. Many of the Institutions have no Institutional capacity or capital base to offer other
services. There are few that are able to offer other products and services other than the loan
product.. There are many SACCOs like Baraton SACOO society limited who offer services to
the public. They (Baraton SACCO) have organized procedures and documentation that enables
them to do this. The main categories of loans and accounts offered are as follows:

 Salary processing

 Account i.e. Savings, children, holiday, group, business, education, fixed deposit etc.

 Emergency loans

 sales of bankers cheques

 salary advances

 Special loans

 loan clearance

 M-pesa

 short term loans

 welfare loan

Depending on what kind of loan a member is applying for, it varies in size and period of
payment. The loan interest varies from 10% to 18% p.a. across the SACCOs with payment
periods ranging from 5 months to 36 months. Once a member applies for a loan approval is
ideally supposed to take between 14 to 30 days but this is not always the case because of cash
liquidity problems that makes them take longer. The loans are screened and approved by a credit
committee or an outside body e.g. Baraton SACCO society limited members committee screen
and approve the loan.
SACCO Membership

There are different entry requirements for SACCOs. They consist of acquisition of minimum
number of shares that varies from SACCO to SACCO. They are between Ksh 100 to Ksh 6,000.

The membership is characterized by monthly contribution which is either through check off
system for the employment based institution; percentage deduction from sales of goods eg at
Baraton SACCO, 10% of the sales of members carvings are deducted and remitted to the
SACCO. Members simply remitting to the SACCO the agreed monthly contribution where there
are no mechanisms for direct deductions also raise shares.

Membership in SACCOs varies depending on outreach of the SACCOs. They range between
about 158 to 37,000 members. There is however a big variance between potential members and
the actual members. This shows poor outreach in the SACCOs to its target membership.

Capital Bases

Capital in the SACCOs is raised through members’ contributions. There is a minimum share
capital raised and maintained before loans can be disbursed to members. Share capital raised
from the members ranges from Ksh 66,000 to Ksh 160 million.

Other Activities

SACCOs get involved in marketing of the products they sell for wider outreach. They sell their
policies in barazas, social gatherings (funerals), promotion meetings, the church structure,
women groups, local leaders and society meetings. Baraton SACCO is thinking of mobilizing
local Matatus at Baraton center to start Matatu groups / association. SACCOs’ share capital base
is not dependent on the number of members it has.

PROBLEMS EXPERIENCED BY SACCOs IN KENYA

SACCOs experience a wide range of problems partly owing to the fact that they target low
income earners and have to establish a balance between serving them adequately and also
meeting their operation costs. Some of the major problems experienced by SACCOs are as
follows in order of most recurrent problem.

 No comprehensive Loan policy and procedures

Most SACCOs either have no loan policy and procedures or what exists is not very clear and
comprehensive. There are cases where loan-aging analysis is hardly practiced, there are no
provision for loan write offs and losses. No guidelines exist as to what to do in cases where a
member defaults in loan repayment.

 No Institutional capacity to introduce other Products & Services

Most SACCOs lack capacity to expand their product range because of lack of capital & also lack
of necessary management systems. They lack in capacity for market research and product
development to introduce other services.

 Lack of Sufficient Funds for provision of services

Some SACCOs suffer from lack of sufficient funds to provide services especially loans to its
members. Whereas waiting period for loans in some institutions could be 14 – 30 days, members
have to wait for between 6 – 12 months to have access to the loans. Even seemingly organized
SACCOs with comprehensive loan policies suffer from lack of enough capital for service
provision.

 No Internal Control Systems put in place

For some SACCOs, there are no savings & internal control procedures have been put in place.
They lack from internal audit committee, no written audit policy and procedures. Reconciliation
of cashbook balances and actual cash in the safe is sometimes not done frequently. There is poor
documentation of loans and other financial record.

 Client Base not growing

The membership of the SACCOs is either stagnant or declining. The client base is not growing
fast enough despite numerous campaigns by some SACCOs

 Lack of Vision / Strategy follow up

Some SACCOs lack a clear cut direction of where they are going, what they want to achieve or
progress they are making towards their targets. There are cases where disbursement targets have
fallen behind growth targets. Systematic process towards product development or improvement
is also lacking.

 Loan defaults from members

Several cases of where members default from loan payments.

 Non Aggressive Staff / Lack of Staff

Some SACCOs suffer from lacking aggressive guidance from the management committee and its
staff. In one particular SACCO there was no succession plan. One sole owner who kept all
documentation and issues relating to the SACCO ran the Society. After his death the SACCO
went down, as there were no records to ensure its continuity.

References:(in complete work)

Ganser, T. (1996). What do mentors say about mentoring? Journal of Staff Development, 17(3),
36-39

Galbraith, M. W., & Cohen, N. H. (Eds.). (1995). Mentoring: New strategies and challenges.
San
Francisco, CA: Jossey-Bass.

Siror, J. (2011, April 25).Time running out for Sacco’s offering FOSA.Retrieved April25, 2011,
from standard online: http://eastandard.net

Wahome,M.(2011,March 5).Sacco’s may fail to get new license: Retrieved April 25, 2011,from
Daily nation online: http//www.nation.co.ke
KIPPRA,survey result.(2006).legal and other constraints on Access to financial services in
kenya:Retrieved April 14 2011,from http://www.kippra.org

Ademba,C.(2011,March 4).inaugural license ceremony. Retrieved April

20,2011,from:http//www.kusco.com

CHAPTER THREE

3.0 RESEARCH METHODOLOGY.

3.1 INTRODUCTION:

This chapter describes the research methodology used in the study. It covers:

 Area of study

 The respondents

 Variables of study

 Research design

 Study population

 Data collection instrument

  Sample technique

 Statistical treatment of data

3.2AREA OF STUDY

The study was limited only to Baraton SACCO society limited, services and concentrated on the
customers’ perception to services provided by the Baraton SACCO society limited.

3.3 THE RESPONDENTS

The respondents included were Baraton Sacco’s customers i.e. (Student, casual workers,
entrepreneurs, staff/faculty and other that do not fall among the listed categories).

3.4 VARIABLES OF STUDY

The research variables are; gender, age, citizenship, occupation, educational, current ,residence,
rating of some of the aspect about SACCO and rating of the services, rating of the staff .

3.5 RESEARCH DESIGN

The target sample will be randomly stratified so as to take into account the opinions and views of
the intended participants in investment activities.

The researchers used different ways and methods in the accumulation of the information about
the study.

3.5.1 Primary data:

Primary data can be defined as data observed or collected directly from-first hand experience.

The primary data was delivered from the distribution of questionnaire to the student, staff,
casual worker and entrepreneurs.
The survey questionnaire which was distributed to the respondents aimed to specifically answer
significant questions they were to specify their gender, age, occupation, residence and
citizenship.

3.5.2 Secondary data:

Secondary data can be defined as the data that has been published and collected in the past from
other parties.

The secondary data that were relevant to this study were derived from related studies and records
from the SACCO where the researchers got the information pertaining to the number of customer
from there the researchers made estimation of sample size.

3.6 STUDY POPULATION

It should be hinted that the population used in the computing for the sample size is the total
active customers of the Baraton SACCO. The total population considered in this study is ninety
nine. This is the population of all active customer of the SACCO for year 2011.

3.7 DATA COLLECTION INSTRUMENTS

A set of questionnaire will be used. The questionnaires will consist of structured and
unstructured questions. The questionnaire will be presented to the respondents and the results
analyzed to draw conclusions.

3.8 SAMPLE TECHNIQUES

The target sample will be randomly stratified so as to take into account the opinions and views of
the intended participants in study activities.
The sample will be randomly stratified since the population targeted will be heterogeneous
implying that it involves different categories of individuals consisting of staffs/faculty, casual
workers, student and entrepreneurs.

The total population considered in this study is ninety nine . This is the population of all active
members of the SACCO year 2011.

The formula used to arrive at the sampling size was formulated by Slovin(1960) it is as follows;

n=N / (1+Ne2)

Where n=sample size

N=population size

e=margin error (0.05 or 5%)

Sample computation is presented below

n=99/ (1+99*0.052)

=79

3.9 STATISTICAL TREATMENT OF DATA

Both manual and electronic method of tabulations of the gathered data were used, in projection
of historical data the researchers used the description statistics with the help of software SPSS.

The research data is amenable to treatment by the available techniques for descriptive analysis.
There will be the use of table in the analysis of data obtained from the respondents who filled the
questionnaires. The data analysis will be put in for of tables and percentages will be indicated.