INFLUENCE OF MACRO-ECONOMIC FACTORS ON MEMBERSHIP GROWTH OF DEPOSIT-TAKING SAVINGS AND CREDIT COOPERATIVE SOCIETIES IN NAIROBI COUNTY, KENYA
Charity Mburu - United States International University – Africa, Kenya
Dr. Samuel Wainaina - United States International University – Africa, Kenya
ABSTRACT
Macroeconomic instability remains a critical challenge affecting the performance and sustainability of Savings and Credit Cooperative Societies (SACCOs) in Kenya. In particular, fluctuations in inflation, interest rates, and economic growth have influenced the ability of SACCOs to attract and retain members. This study investigated the extent to which these macroeconomic factors affect the membership growth of Deposit-Taking SACCOs in Nairobi County. The specific objectives were: to determine the influence of inflation rate, interest rate and economic growth on SACCO membership growth. The study adopted a descriptive survey research design. The target population consisted of 30 deposit-taking SACCOs registered and licensed by SASRA to operate in Nairobi County as of December31st 2024, with the unit of observation being Chief Executive Officers (CEOs), Finance Officers, Credit Managers, and Membership Coordinators. This study employed a census, where all 30 Deposit-Taking SACCOs (DTSs) registered in Nairobi County were included in the study. Data was collected using a structured questionnaire. To ensure data quality, the questionnaire underwent both validity and reliability testing. Data was analyzed used descriptive and inferential statistics. The study found that rising inflation has led to reduced monthly contributions among members, inflation reduced the value of member savings over time, inflation decreased members' purchasing power, making it harder to save regularly, and inflation influences the strategic planning and budgeting of SACCOs. Also, the research found that the SACCO regularly adjusted loan interest rates based on changes in the Central Bank Rate. However, the study found that economic growth did not allow SACCOs to introduce innovative financial products. The study concluded that inflation rate had the greatest influence on the membership growth of deposit-taking SACCOs in Nairobi County, Kenya, followed by interest rate while economic growth had the least effect to the membership growth of deposit-taking SACCOs in Nairobi County, Kenya. All the variables were significant as the p-value was less than 0.05. It is recommended that SACCO management adopts strategies to mitigate the negative effects of macroeconomic factors such as inflation and interest rate fluctuations. SACCOs should consider offering inflation-indexed savings and loan products that can help members maintain the real value of their savings during inflationary periods.