Governance In Saving And Credit Associations Operating In Addis Ababa

Corporate Governance in Saving and Credit Cooperative Societies (SACCOs) is pivotal for suchrninstitutions having a peculiar nature of member-owner attributes. This study aimed at thernassessment of governance practices in SACCOs. The study has targeted on three functionalrnSACCOs in Addis Ababa of Ethiopian Electric Power Corporation (EEPCo), Ethiopian AirportsrnEnterprise, & Catholic Relief Services. Purposive sampling techniques were used to gather datarnfrom the selected SACCOs. Pertinent data were collected through primary data sources usingrnstructured questionnaires and secondary data sources. Data collected has been entered, editedrnand analyzed using SPSS tool. Based on the study, there are no consistencies as to ownershiprnwithin the SACCOs. The Board size ranges from seven to nine members in these SACCOs withrnlimited representation of female members at around 30% of total board size.rnThe studyrnidentified challenges in conducting periodic meeting and performance assessments at Boardrnlevel. Annual audits in the SACCOs were not conducted timely after closure of a fiscal period.rnTrainings related to governance and management of SACCOs was not adequately provided tornBoard members. Incentive schemes either in cash or in kind for Board members are poor, if notrnnone at all like at CRS. SACCOs mostly pay an annual interest rate of 5% on saving depositorsrnwhich is the risk free market rate offered in most commercial banks on saving accounts. Interestrnrate on loans of the three SACCOs remains stagnant ranging from 6% to 8% which doesn’trnconsider at least yearly inflation and time value of money. Finally, it is commendable to considerrnon a clear definition of ownership, improving capital adequacy position, periodic and timelyrnsupervision and audit, strengthening sound financial discipline in optimal utilization of hugernsavings mobilized to productive loan portfolios and better investment opportunities. Itrnnecessitates revisiting interest rates both on savings and loans to reflect administrative costs,rncost of funding, inflation and elements of capitalization

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